Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on February 13, 2013.
Why the Downgrade?
On February 8, 2013, this diversified machinery company reported
its fourth quarter and year 2012 financial results. The company's
earnings per share came in at 26 cents, below 34 cents reported
for the year-ago quarter. The results also missed the Zacks
Consensus Estimate of 34 cents by 23.5%.
Sales declined 4.7% due to weakness experienced in the demand
from the water and non-water end markets. Gross margin increased
a mere 10 basis point while operating margin registered a 190
basis point decline due primarily to lower volumes in the
Exiting the year, the company's backlog of orders was down 7.8%
year over year at $143.4 million due to shipments as well as
lower orders from the construction, municipal, industrial and OEM
For fiscal 2013, management revised down its revenue expectation
from the $105-$115 million range to the range of $102.5-$107.5
million. SG&A is now expected to be 16.5%-17% of revenue as
against 16%-17% expected earlier.
The Zacks Consensus Estimate for fiscal 2013 went down by 5.1% to
$1.50 while that for 2014 decreased by 1.1% to $1.87 per share in
the last 30 days.
Downward revision in earnings estimate and negative earnings
surprise in three out of four trailing quarters with the average
being -6.3%, raise our skepticism about the financial health of
the company. For fiscal 2013 and 2014, we have an Earnings ESP
(Read: Zacks Earnings ESP: A Better Method) of -6.7% and -14.4%,
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
), each holds a Zacks Rank #2 (Buy).
ALTRA HOLDINGS (AIMC): Free Stock Analysis
ATLAS COP-ADR A (ATLKY): Get Free Report
GORMAN RUPP CO (GRC): Free Stock Analysis
METSO CORP -ADR (MXCYY): Free Stock Analysis
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