) 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
of -6.48% for 2014 and -1.27% for 2015.
A brief discussion of Colfax's second-quarter result is provided
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
Colfax Corporation - Quarterly EPS (BNRI) |
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
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.
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%.
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
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.
EnPro Industries, Inc.
). While Blount International and EnPro Industries sport a Zacks
Rank #1 (Strong Buy), Dover Corporation carries a Zacks Rank #2
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