On Nov 30, Zacks Investment Research downgraded metal alloys
Haynes International, Inc.
) to a Zacks Rank #5 (Strong Sell).
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Haynes posted disappointing fourth-quarter fiscal 2013 (ended Sep
30, 2013) results on Nov 21. Profit slumped around 69% year over
year to $4 million, hurt by a double-digit fall in sales. The
company's earnings of 32 cents per share were flat with the Zacks
Consensus Estimate, but dropped 69% from $1.04 in the year-ago
quarter. For fiscal 2013, Haynes' earnings of $1.74 per share
declined 57% from $4.07 per share posted a year ago.
Haynes has delivered negative earnings surprises in two of the
last four quarters with an average negative surprise of 9.88% for
the trailing four quarters.
Revenues fell 23% year over year to $115.7 million in the fourth
quarter, hit by weak market conditions, lower average selling
prices and reduced sales volume. Sales missed the Zacks Consensus
Estimate of $123 million. For the full year, sales declined 16.7%
year over year to $482.7 million.
Volume contracted 10% year over year to 21 million pounds in
fiscal 2013. Average selling price narrowed 7.4% year over year
to $22.94 per pound in fiscal 2013 on account of reduced raw
material prices, lower volume of conversion sales, increased
competition and weak demand.
Haynes' consolidated backlog was $166.6 million as of Sep 30,
2013, down 25.3% year over year. The reduction in the backlog
stemmed from lower order entry volumes, due to continued
destocking in the supply chain.
Gross margin contracted to 15.3% in fiscal 2013 from 20.9% a year
ago, impacted by pricing competition, higher-cost inventory in
cost of sales and unfavorable absorption of fixed costs.
Operating income fell 58.4% year over year to $32 million in
Moving ahead, Haynes remains optimistic about the growth
potential of the aerospace, land-based gas turbine and chemical
processing markets. However, for the first quarter of fiscal
2014, the company does not expect an increase in demand and thus
intends to undergo maintenance at its manufacturing facilities
over the holidays. As a result, Haynes expects revenues to drop
sequentially in the first quarter and incur a net loss.
The Zacks Consensus Estimate for fiscal 2014 for Haynes has gone
down roughly 27.8% to $2.23 per share since the fourth-quarter
fiscal 2013 earnings release. The Zacks Consensus Estimate for
fiscal 2015 has also declined 13% to $3.68 per share.
Other Stocks to Consider
Better-ranked stocks in the metal fabrication industry include
Dynamic Materials Corp.
). All of them hold a Zacks Rank #1 (Strong Buy).