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The Company is a designer and manufacturer of screw-in hydraulic cartridge valves and manifolds, which control force, speed, and motion as integral components in fluid power systems.
Founded in 1970, Sun Hydraulics Corp is of the leaders in designing and manufacturing high-performance screw-in hydraulic cartridge valves and manifolds. Since it went public in 1997, it has been rewarding shareholders every quarter by paying a dividend and also has a history of special dividends.Customer Dependence: No one customer makes up greater than 7% of sales, so a blow to one won’t have huge implications on Sun.Sales Breakdown by Region (Q3 2010):North and South American: 45%Europe: 32%Asia: 23%Competition:Full-line Producers Niche ProducersEmerging low-cost producersHowever SNHY maintains its edge through “quality, reliability, price, value, speed of delivery and technological characteristics of its products and services”.When times were thriving, Sun was reducing debt and building up cash, to current holdings of $32million, allowing them to be able to deploy that cash if the right opportunity appears, however according to Allen Carlson (President, Chief Executive Officer, Director) during the Q2 2010 conference call he states “I don’t think anything is imminent in terms of acquisition.” The balance sheet is not only strong with a debt-to-assets ratio of 0% but even through 2009, their cash flow from operations has remained positive.By looking at revenue trends, it is evident that Sun Hydraulics is a cyclical as revenues in 2009 dropped by 45% to $97 million, however, as the business climate improves; the business looks to thrive, with 2010 revenues back up to $150million. With demand to rebound in 2011, and a better capture of the Indian market will allow SNHY to thrive and increase its sales, earnings, continuing its high productivity and quality through innovation and reward shareholders again and again. Insider holdings are at an encouraging 26.09%, however my insider transactions rating stands at neutral leaning towards negative.I love how boring their annual report is, and how honest they are in telling the numbers, just plain black and white. They don’t focus on rewarding the shareholders in words in the reports, but just on customers, and instead put money where their mouth is (and where the shareholders pockets are) and reward shareholders in practice through capital gains and dividends. Their aim remains in offering superior products, reliable delivery, and as a by-product that makes SNHY a good investment.
The insider who is dumping boatloads of cash is the daughter of one of the founders, who has since passed. I think she is just cashing out on her father's legacy. However, when Carlson, the current CEO sells, it is usually time to trim a bit and reload at a lower price.
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