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Will Bairnco Turn Into A Comeback Kid?


Inside Wall Street

WILL BAIRNCO TURN INTO A COMEBACK KID?

Bairnco, one of the high fliers of the 1980s, caught the Street's fancy back then as it acquired companies and then spun them off to shareholders. Its stock flew as high as 41 a share in 1987. In the past two years, however, Bairnco has received nothing but the Street's scorn, and the stock now trades at 7 3/8. But of late, some big investors have started buying in. "The stock is now dirt cheap," argues one New York money manager.

According to this investor, Bairnco, a diversified manufacturing company, sells close to its book value and deserves a much higher price-earnings multiple: Based on estimated 1992 earnings of 65 cents a share, the stock is trading at a p-e of 11. And based on his 1993 estimate of 85 cents, the p-e is 8.6.

This money manager thinks that Bairnco, which has just restructured its operations to focus on three niche-market businesses, is "well on its way to a sharp earnings turnaround."

CUTTING EDGE. Earnings had been in a downspin since 1988, culminating in a loss of 67 cents in 1990. Back in the black last year with earnings of 41 cents a share, Bairnco is expected to benefit from its three profitable core segments. One unit produces such specialty products as band-saw blades for cutting frozen meat and fish, meat chopping plates, and knives for food stores and food-processing plants. Bairnco also makes electronic materials and components, including microwave circuit boards for cellular telephone base stations, broadcast satellite television, and military radar. Bairnco's third unit makes engineered laminates, pressure-sensitive adhesives, and silicone rubber for a broad range of commercial products.

The speculation is that Bairnco will sell or spin off to shareholders its Ray Proof unit once it gets back on its feet. Ray Proof makes protective chambers used by the military to test explosives and has been a money loser because of weak demand for defense products.

Analyst Harry Katica of Raymond James & Associates is high on Bairnco. He notes that the stock is trading at a 20% discount to its peer group's average of 13 times estimated 1992 earnings. Katica says that the stock should trade at 15 to 16 times 1993 estimated earnings, or 12 to 13 a share.

A number of corporate insiders have been buying shares on the open market. Vickers Weekly Insider Report, which tracks the trading activity of corporate executives, has included Bairnco in its own 15-stock "Vickers Insiders' Portfolio."GENE G. MARCIAL


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