On May 8, 2014, we issued an updated research report on
). The company had earlier reported modest first-quarter 2014
results. The quarterly results were primarily impacted by a
sluggish government-funded business.
The company reported negative earnings surprises in the last
four quarters, with an average beat of -5.64%. The
first-quarter earnings were down 28.6% year over year and came in
at a penny below the Zacks Consensus Estimate.
The company reported decline in both earnings and revenues in
first-quarter 2014. The top line was affected by a dismal
performance by its mining and metals business and the prevailing
sluggishness in the company's government segment. Furthermore,
political uncertainties in key regions like Russia are also
impacting FLIR's financials.
On the other hand, the company is likely to benefit from its
ongoing restructuring activities of streamlining its business by
integrating facilities and reducing costs. Also, FLIR continues to
develop new products in order to gain market traction. Moreover,
having successfully incorporated the Lorex business into its
structure, FLIR is now capitalizing on the gains from the
FLIR is in an advantageous and profitable position relative to
its peers due to its cost effective strategy. The company remains
focused on realigning its business by closing its non-profitable
facilities and integrating the functional ones, including its
optics and laser manufacturing businesses, to reduce overhead costs
Further, FLIR is focused on building a strong global order
backlog and has also shifted selling efforts from Europe to the Far
East. The company's backlog stood at about $514 million as of
Mar 31, 2014, marking an increase of $24 million in the quarter.
Apart from this, the company has managed to receive several
contracts from the U.S. Department of Defense which is expected to
boost revenues going forward.
On the flip side, FLIR's government division revenues declined
to 39% in 2013 from 45% in 2012 due to a significant drop in volume
and unfavourable product mix. In the reported quarter, the
company's revenues from the U.S. government deteriorated 8% owing
to the persistent slump in the government-funded business.
FLIR Systems currently holds a Zacks Rank #2 (Buy). Some other
well-performing stocks in the sector include
Alliant Techsystems Inc.
Illinois Tool Works Inc.
) all of which carry the same Zacks Rank as FLIR Systems.
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