We recently upgraded our recommendation from Neutral to
). The company is one of the leading manufacturing and
engineering companies specializing in products and services
related to gas-and fluid-handling and fabrication technology.
Acquisitions, over time, have played quite an important role in
strengthening Colfax Corporation's businesses. There were the
recently announced agreements to acquire CKD Kompresory a.s. from
CKD Group and Global Infrastructure and Industry (GII) business
of Flakt Woods Group. Both are anticipated to boost the company's
Howden line of business through the addition of broad product
portfolio and large customer base.
Besides acquisitions, strong end markets, exposure to emerging
markets as well as leading brands makes Colfax a long-term
winner. The company targets to achieve organic growth of 1-2%
above GDP growth, operating margins in the mid-teens level and
free cash flow in excess of net income over the long run. Markets
for Howden products are expected to grow roughly 4-6%; Mining by
6%; Power/Environment by 9%; Colfax Fluid Handling by 5-7%; and
Fabrication Tech by 3%.
With regard to the company's financial performance, earnings per
share in the second quarter 2013 came in at 54 cents, up 60.0%
year over year and one cent above the Zacks Consensus Estimate.
Revenue grew 2.7% due to solid contributions from acquisitions,
more than offsetting weakness in organic business and negative
foreign currency translation impact. Backlogs were strong at the
end of the quarter. Adjusted operating margin expanded 160 basis
points to 10.9%.
For 2013, management of Colfax anticipates adjusted earnings per
share to range within $1.95-$2.10. Considering all these, we
upgraded our view on Colfax which has a Zacks Rank #2 (Buy), to a
Other Stocks to Consider
Colfax currently has a market capitalization of $5.8 billion and
provided a year-to-date return of 54.6%. Other companies to look
out for in the industry are
Manitex International, Inc.
), with a Zacks Rank #1 (Strong Buy) while
), each carry a Zacks Rank #2 (Buy).
COLFAX CORP (CFX): Free Stock Analysis Report
DOVER CORP (DOV): Free Stock Analysis Report
INGERSOLL RAND (IR): Free Stock Analysis
MANITEX INT INC (MNTX): Free Stock Analysis
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