Harman, American Woodmark, Bemis: Enjoying Consumer Tailwinds

Harman, American Woodmark, Bemis: Enjoying Consumer Tailwinds

Consumer sentiment soared to a six year high in the United States in July, according to a survey conducted by the University of Michigan. The survey revealed consumer sentiment reading stood at 85.1 in July, up nearly 13 points from the same month last year. This soaring consumer confidence is likely to result in higher sales of certain goods and commodities. As such, companies like Harman International Industries Inc./DE/ (NYSE:HAR), American Woodmark Corporation (NASDAQ:AMWD), and Bemis Company, Inc. (NYSE:BMS) stand to benefit from this splurge. Here is a closer look:

Harman, American Woodmark, Bemis: Enjoying Consumer Tailwinds

Harman International vehicle sales boom

Connecticut-based Harman International Industries Inc./DE/ (NYSE:HAR) produces audio products and electronic systems and supplies them to automakers as well as directly to consumers. The stock gained 15 percent over the last month and currently trades at close to 52-week high.

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Harman International Industries Inc./DE/ (NYSE:HAR) is a supplier to most large automakers and going by surging sales of cars in the United States, Harman International can be expected to report financial numbers ahead of street expectations when it announces fourth fiscal quarter results early next month. Apart from booming vehicle sales, another factor expected to contribute to profits is the receding price of key raw material neodymium in recent month. A forward price earnings ratio of 15.5 corroborates this optimism. Another positive with Harman International’s stock is a low debt equity ratio of just 0.18 while price by sales ratio of just 0.96 indicates the stock trails the market in some aspects.

American Woodmark housing impetus

American Woodmark Corporation (NASDAQ:AMWD) produces kitchen cabinets and is a direct play on the booming housing market. With a market capitalization of $517 million, it is a given that the company has a wide range of products to offer to customers. A portfolio of approximately 550 different cabinet lines aided the company to achieve a top line of $630 million during the year ended April 30, 2013, marking a growth of nearly 22 percent. Last year the company also turned profitable with earnings of $9.8 million.

These results were ahead of what most analysts were expecting but the out-performance is likely to continue in coming quarters as well. Housing recovery had a big role in the earnings surprise and the recovery continues on its growth trajectory. In terms of valuations, the stock is not overpriced as forward price earnings ratio of 17.3 tells. The company is armed with a lean capital structure (debt equity ratio of just 0.17) which should help it in extracting maximum out of sales growth in quarters to come.

Bemis Company food packaging business attractive

With an economic recovery underway, many people are relocating as a result of jobs growth. Consumers are also spending in eating outside and shifting to larger homes and better locations – factors which are increasing business for packaging products player Bemis Company, Inc. (NYSE:BMS). This Wisconsin based company derives majority of business from food packaging where consumption should increase as consumers feel more confident about the state of economy. This is already reflected in the latest quarterly results for the period ended June 30, 2013.

The company posted a 25.5 percent growth in net earnings to $53.1 million despite missing on sales growth expectations. Gross margin improved to 19.4 percent from 17.8 percent in the same period a year ago. During the earnings release, the management said debt paydowns and buybacks are top considerations for the company when it comes to capital utilization. This will help in reducing debt levels which currently stand at 0.95 times of equity.


In a nutshell, these stocks are poised to benefit from the rising consumer sentiment. Strongest of the lot appears to be American Woodmark Corporation (NASDAQ:AMWD) which has got strong tailwinds from the housing market. The company is scheduled to report quarterly results next month, which can be used to create long positions by investors.

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