Bearish Stance on Chart Industries - Analyst Blog


Zacks Investment Research downgraded Chart Industries Inc. ( GTLS ) to a Zacks Rank #5 (Strong Sell) on Feb 26, 2014. Going by the Zacks model, the companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market and hence, investors seeking exposure to metal fabrication companies are recommended to either avoid investing in or to dispose-off their existing holdings in Chart Industries.

Why the Downgrade?

Chart Industries' lackluster fourth-quarter 2013 results dampened market sentiments that led to nearly 10.0% fall in share price at the end of trading on Feb 25. Adjusted earnings per share were 82 cents compared with 80 cents recorded in the year-ago quarter and in line with the Zacks Consensus Estimate.

Revenues generated were $304 million, flat compared with the year-ago quarter and 4.6% below the Zacks Consensus Estimate of $319 million. Selling, general and administrative expenses increased 3.1% year over year.

Adding to lower-than-expected top- and bottom-line results, was Chart Industries' guidance for 2014 which gave no reason to rejoice either. Revenues are expected within a range of $1.3-$1.35 billion while earnings per share are expected to be within the $3.10-$3.50 range.

Fourth-quarter 2013 results triggered downward revisions in earnings estimates for Chart Industries. In the last 7 days, the Zacks Consensus Estimate has fallen 9.4% to $3.38 for 2014 and 3.5% to $4.63 for 2015. Lowered earnings estimates along with a negative 13.5% average earnings surprise have made us dubious about Chart Industries' performance in the coming quarters. We currently have an Earnings ESP of -6.9% for the first quarter 2014 and -1.3% for the second quarter.

Other Stocks to Consider

Chart Industries is a $2.5 billion company. Some better-ranked stocks in the same industry include DXP Enterprises, Inc. ( DXPE ), Kadant Inc. ( KAI ) and Middleby Corp. ( MIDD ), all of which carry a Zacks Rank #1 (Strong Buy).

DXP ENTERPRISES (DXPE): Free Stock Analysis Report

CHART INDUSTRIE (GTLS): Free Stock Analysis Report

KADANT INC (KAI): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DXPE , GTLS , KAI , MIDD

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