On Dec 27, Zacks Investment Research downgraded
) to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold), on
lower-than-expected earnings for the first quarter of fiscal
Why the Downgrade?
In December, Actuant reported earnings per share of 44 cents
in the first quarter of fiscal 2014, missing the Zacks Consensus
Estimate of 46 cents by 4.4%. Sales of $340 million were
adversely impacted by 1% from negative foreign currency
translations. The company recorded a 2% year-over-year decline in
sales from the Industrial segment to $99 million, due to lower
global activity in the Integrated Solutions business.
Although the Energy segment's sales improved 19% year over
year to $108 million, the core sales decreased 1%. The company
operates in roughly 30 countries, which are important
contributors to the total revenue. However, international
presence also increases the company's exposure to foreign
currency risks, various environmental and economical laws as well
as cultural diversity. This may lead to severe operational
disruptions for the company.
Additionally, the company operates in a highly competitive
industry. In order to stay ahead of its peers, Actuant needs to
keep inventing products and technologies. This involves huge
research and development expenditure which may prove futile if
customers are not convinced.
For the second quarter of fiscal 2014, Actuant anticipates
revenues in the range of $330.0 million to $340.0 million.
Earnings per share are expected in the range of 29 cents to 33
Following the results, the Zacks Consensus Estimate for fiscal
second-quarter of 2014 decreased 15.4% to 33 cents per share. The
estimate for fiscal 2014 dropped 2.9% to $2.02 per share, while a
decline of 2.6% to $2.29 per share was projected for fiscal
Other Stocks to Consider
Actuant currently carries a market capitalization of $2.7
billion. Some better-ranked stocks to watch out for in the
Barnes Group Inc.
Flow International Corporation
). While Xylem and Barnes Group carry a Zacks Rank #1 (Strong
Buy), Flow International holds a Zacks Rank #2 (Buy).
ACTUANT CORP (ATU): Free Stock Analysis
BARNES GRP (B): Free Stock Analysis Report
FLOW INTL CORP (FLOW): Free Stock Analysis
XYLEM INC (XYL): Free Stock Analysis Report
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