BRIGGS & STRATTON CORP. $22 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 47.0 million; Market cap: $1.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.briggsandstratton.com) is the world’s largest maker of lawn mower engines. The company also makes a variety of other home and garden equipment, such as portable power generators, pressure washers and snow blowers.
In Briggs’s 2014 second quarter, which ended December 31, 2013, its sales fell 5.1%, to $416.6 million from $439.1 million a year earlier.
Sales of engines to manufacturers (61% of total sales) fell 3.1%, mainly because the year-earlier sales benefited from strong generator demand after Hurricane Sandy. A lack of major storms also caused sales of consumer products (39%) to decline 13.2%.
Briggs continues to cut costs, including shifting production to China and dropping less-profitable products. The company feels these moves should lower its expenses by $2 million to $4 million in its 2014 fiscal year. Without restructuring costs, Briggs’s earnings fell 37.5% in the quarter, to $2.3 million from $3.7 million. Per-share earnings declined 28.6%, to $0.05 from $0.07, on fewer shares outstanding.
Briggs’s long-term debt of $225.0 million is a manageable 23% of its market cap. Moreover, it does not have to pay back these loans until 2020. It also holds cash of $98.2 million, or $2.09 a share.
The stock trades at a high 21.0 times the $1.05 a share that Briggs will likely earn for all of fiscal 2014. The $0.48 dividend yields 2.2%.
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