Disappointing results and downbeat guidance have led to sharp
downward estimates revisions, sending this wire and cable
products company to a Zacks Rank # 5 (Strong Sell) on November 8,
About the Company
Headquartered in Highland Heights, Kentucky,
General Cable (
develops, designs, manufactures, markets and distributes copper,
aluminum and fiber optic wire and cable products for the energy,
industrial, specialty and communications markets around the
Disappointing Results and Guidance
On November 4, 2013, the company reported its third quarter
estimated results and also provides comments on the their fourth
Adjusted earnings for Q3 2013 were $63 million or $0.45 per
share, substantially short of the Zacks Consensus Estimate of
$0.55 per share. Results were hurt by lower than expected
seasonal demand in North America and continued pricing pressure.
While the demand for copper-based electrical infrastructure
products and specialty cables remained stable, it was more than
offset by lower-than-expected aluminum-based Electric Utility
For the fourth quarter, the management expects typical seasonal
volume declines to be partially offset by project-related
activity globally. Operating cash flow is now expected be in the
range of $0 to $20 million during 4Q, lower than earlier
expected. According to the company, the revised guidance reflects
the impact of lower cash earnings as well as lower reduction in
inventory primarily in North America and Latin America.
For 2014, the company expects end markets to remain relatively
flat in North America and European recovery to remain uneven.
Due to disappointing results, quarterly and annual estimates have
been revised sharply downwards in the past few days by analysts.
Zacks consensus estimate for the current quarter now stands at
$0.31 per share versus $0.54 per share, 30 days ago, while the
full-year consensus estimate is $1.68 per share now, down from
$2.00 per share. Further, the estimate for 2014 has gone down
from $2.83 to $2.25 per share. The company has missed estimates
in three out of last four quarters, with an average negative
surprise of 79.4%.
The Bottom Line
BGC is currently Zacks Rank # 5 (Strong Sell) stock and it also
has a longer-term recommendation of "Underperform". The
near-term outlook for the company remains cloudy due to low metal
prices and uneven macroeconomic conditions in some of its
markers. Further, the company is currently in the process of
restating its financial statements for past two years and interim
periods in 2013. Restatement further adds to the uncertainly
related to this stock.
Investors looking for exposure to the industry (Wire and Cable
Products) can consider Encore Wire Corp (WIRE)-a Zacks rank
#1(Strong Buy) stock. The company delivered very strong results
for the third quarter, beating Zacks consensus estimates for
earnings as well as for revenues.
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