Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on February 23, 2013.
Why the Downgrade?
The $3.97 billion worth diversified machinery company posted its
financial results for the fourth quarter and year 2012 on Feb 6,
2013. Adjusted net income per share in the quarter stood at 42
cents, up 27.3% year over year and 7.7% above the Zacks Consensus
Estimate of 39 cents.
Despite the beat in net earnings, poor revenue yield raised our
concerns for the stock. Pro forma revenue in the quarter fell
2.1%, due primarily to a 2.5% fall in organic revenue and a
negative 2.9% impact from foreign currency translation. The
impact of these was partially offset by a 3.3% positive
contribution from acquisitions. Adjusted operating margin in the
quarter plummeted 380 basis points.
Apart from the financials for the fourth quarter, guidance for
the first quarter 2013 included expectation of flat organic
revenue growth and earnings per share to approximate its
comparable quarter's earnings a year-ago. Impacts from higher
operating profit are likely to get offset by higher interest
expense and share count.
The financial results for the quarter induced downward revisions
in earnings estimates for the company. The Zacks Consensus
Estimate for 2013 went down by 5.6% to $1.85 while that for 2014
decreased by 6.2% to $2.44 per share in the last 30 days. Also,
for 2013 and 2014, we have an Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of -0.54% and -0.82%, respectively.
Other Stocks to Consider
Other stocks to watch out for in the industry are
Altra Holdings, Inc.
) with a Zacks Rank #1 (Strong Buy) while
Atlas Copco AB
) have a Zacks Rank #2 (Buy).
ALTRA HOLDINGS (AIMC): Free Stock Analysis
ATLAS COP-ADR A (ATLKY): Get Free Report
COLFAX CORP (CFX): Free Stock Analysis Report
METSO CORP -ADR (MXCYY): Free Stock Analysis
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