Kewaunee Scientific (NASDAQ:KEQU)

We are removing Kewaunee Scientific from the GeoSpecial list. EPS growth has not been spectacular or consistent. Furthermore, The company is also highly dependent on the economy, which is still in a fragile state.

Added to the GeoBargain list on June 24, 2009 @ $11.10 

Peak performance: Reached a high of $13.10 on August 26, 2009.

Removed from the GeoBargain list and Added to the GeoSpecial list  on August 29, 2009 @ $13.10 

Peak performance: Reached a high of  $16.42 on February 25, 2010 .
Current Price: $11.65

Source: See Release, August 26, 2009

FULL YEAR 2009 vs. 2008 FINANCIAL SNAPSHOT ENDED APRIL

Kewaunee Scientific (NASDAQ:KEQU) was added to the GeoBargain list on June 24, 2009, due to strong April ending 2009 fourth quarter results.  Yesterday, the Company reported its 2010 first quarter financial results, prompting the GeoTeam® to reconsider KEQU 's inclusion on the GeoBargain list. Top and bottom line growth were well below the minimum GeoBargain requirements.

Select Valuation Items

• Price: $13.10 (8/25/09)
• Trailing P/E: 7.71
• PEG Ratio: 0.73
• Book Value Per Share: 11.49

The stock still reacted positively to yesterday morning's financial news, possibly a reaction to the company also announcing a 25% increase in its quarterly dividend. This action could signify that better earnings per share growth is in the cards for the remainder of the year. There are also positive overtones in the fact that over the last three years Kewaunee Scientific 's second quarter has been sequentially higher than its first quarter. Still, it doesn't appear that KEQU will be able to achieve the GeoBargain required growth traits for 2009. Notwithstanding this shortcoming, the stock is still selling at a P/E of 7.71 and a PEG ratio under 1 which may attract value investors. Accordingly, we are reclassifying KEQU as a GeoSpecial. If the stock can attain a modest P/E of 10, matching its 2009 first quarter EPS growth rate, then it could reach $17.70.

"Overall, the markets for our products are continuing to hold up well under the global economic slowdown. The domestic laboratory furniture marketplace continues to be healthy, particularly for larger construction projects where our bidding activity remains strong. We also continue to experience good overall bidding activity for smaller domestic laboratory projects, with the level of activity varying by geographic area and market segment. The international laboratory marketplace, while softer than last year, is providing an increasing number of opportunities. The full manufacturing capabilities and lower costs of our new plant in Bangalore, India, are making us more competitive in the Asian marketplace. Both the domestic and international markets remain highly-competitive."

Source: PR Newswire (August 25, 2009)

'Looking toward fiscal year 2010, we believe a number of factors have the Company well-positioned for another good year,' continued Mr. Shumaker. 'A healthy domestic laboratory furniture marketplace, our record order backlog, and excellent performances by our factories are providing us strong momentum. The Asian laboratory furniture marketplace, which was soft the past year, is expected to improve and provide increased opportunities. The move to our new, modern plant in Bangalore, India, is now complete. This plant has full manufacturing capabilities which positions us to compete more broadly for additional projects in Asia and the Middle East. Next year will also present a number of challenges. These include uncertainty as to when the global economic slowdown will end and higher pension costs for the Company due to losses in our pension investments portfolio.'

Source: PR Newswire (June 24, 2009)