Colfax's Share Price Falls on Weak Q2 Earnings, Lowers Outlook - Analyst Blog


Colfax Corporation ( CFX ) disappointed its shareholders and the market at large, by posting weaker-than-expected second-quarter results on Jul 17. Since then, share price of the manufacturing and engineering company has dropped 6.9% while its earnings estimates have been revised downward, reflecting a weaker outlook for the quarters ahead.

Of the 9 analysts covering the stock, 4 have revised their estimates downward for 2014 while 5 out of 10 analysts have lowered their estimates for 2015. The Zacks Consensus Estimate is currently pegged at $2.47 for 2014 and $3.14 for 2015, down 5% and 1.9% respectively in the last seven days. Also, Colfax has an Earnings ESP of -6.48% for 2014 and -1.27% for 2015.

A brief discussion of Colfax's second-quarter result is provided below:  

Colfax reported adjusted earnings of 48 cents per share, down 14.3% year over year and 27.3% below the Zacks Consensus Estimate of 66 cents. Top-line growth was offset by increase in costs and expenses.

Colfax Corporation - Quarterly EPS (BNRI) | FindTheBest

Revenues: Net sales were $1,199.3 million, up 11.7% year over year and above the Zacks Consensus Estimate of $1,263 million. The increase was largely driven by 17.9% contribution from acquisitions. Organically, revenues were down 5% while foreign translation had an adverse impact of 1.2%.

Of the net sales, Colfax generated roughly $568.9 million from Gas and Fluid Handling segment, reflecting a year-over-year increase of 10.1%. Organically, the segment's revenues were down 7.0%, due primarily to sales declines in power generation and oil, gas & petrochemical end-markets. Revenues from Fabrication Technology segment rose 13.1% year over year to $557.3 million, but declined 3.1% organically.

Total orders were $593.8 million, up 24.2% year over year. Backlog at the quarter-end was $1,584.8 million, as against $1,388.4 million in the year-ago comparable period.

Margins: Colfax's cost of sales increased 10.2% and represented 67.6% of total revenue. Gross margin was 32.4%, up 90 basis points (bps) year over year. Selling, general and administrative (SG&A) expenses, as a percentage of revenue, were 23.3%, against 20.6% recorded in the year-ago quarter. Adjusted operating income margin decreased 180 basis points year over year to 9.1%.

Outlook: Colfax has lowered its sales guidance for 2014 to $4.7−$4.8 billion range from the previous projection of $4.85−$4.99 billion.

Adjusted earnings per share are estimated to be within $2.20−$2.35, down compared with the prior expectation of $2.45−$2.70 range. Generally Accepted Accounting Principles (GAAP) earnings per share are anticipated in the range of $2.31−$2.57.

Tax rate is expected to be within 29−30%, while interest expense is predicted to be nearly $56 million versus $58 million expected earlier.

With a market capitalization of $8.4 billion, Colfax holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Blount International Inc. ( BLT ), EnPro Industries, Inc. ( NPO ) and Dover Corporation ( DOV ). While Blount International and EnPro Industries sport a Zacks Rank #1 (Strong Buy), Dover Corporation carries a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

COLFAX CORP (CFX): Free Stock Analysis Report

DOVER CORP (DOV): Free Stock Analysis Report

ENPRO INDUS INC (NPO): Free Stock Analysis Report

BLOUNT INTL (BLT): Free Stock Analysis Report

To read this article on click here.

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 OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CFX , DOV , NPO , BLT

More from

Related Videos

Top Home Financing Myths
Top Home Financing Myths            



Most Active by Volume

  • $5.025 ▲ 6.46%
  • $17.82 ▼ 0.34%
  • $121.139 ▼ 0.13%
  • $3.4645 ▲ 2.80%
  • $12.65 ▲ 49.88%
  • $40.1752 ▼ 9.41%
  • $22.85 ▼ 1.85%
  • $6.53 ▼ 3.97%
As of 8/3/2015, 10:25 AM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by