Buoyant at American Standard

Far from the madding tech crowd is American Standard (ASD), whose shares, believe it or not, have been climbing--with analysts raising their earnings estimates.

Standard, which is in the mundane business of bathroom and kitchen plumbing fixtures and air conditioning, provides shelter against the market's harsh storms. The robust housing market has helped sales a great deal. Standard could earn $5.10 a share in 2001, up from the consensus $4.98 estimate, and could make $6 in 2002, vs. a $5.75 forecast, says John Stanley of UBS Warburg, who rates the stock a strong buy. Standard earned $4.35 a share last year.

What's Standard's allure? Despite some headwind, the company met its targets, notes James Samuels of Banc of America Securities. Indeed, it has had to contend with foreign currency woes and higher energy and labor costs. The stock's rise in the face of those troubles, according to Samuels, "represents a vote of confidence" that CEO Fred Poses will generate consistent earnings growth, improve the balance sheet, and restore investor confidence. He is impressed that Poses has reconfirmed Standard's long-term goals of 5% to 6% revenue growth, margin expansion of at least 50 basis points a year, and 13% to 17% earnings growth.

If Standard achieved a valuation in line with its peers, says Samuels, the stock, now trading at 54, could hit the 80 range in 12 months.

By Gene G. Marcial

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