On March 20, Zacks Investment Research downgraded
Raven Industries Inc.
), manufacturer of industrial goods, to a Zacks Rank #5 (Strong
FED SIGNAL CP (FSS): Free Stock Analysis
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Why the Downgrade?
Raven has witnessed sharp downward estimate revisions after
reporting disappointing fourth-quarter fiscal 2014 results on
March 12. The stock also fell around 11% in the trading session
after the earnings release.
In the quarter, Raven's earnings declined 23% year over year to
23 cents per share. The reported figure fell short of the Zacks
Consensus Estimate of 32 cents. Increased raw material costs in
the Engineered Films segment, increased investments in research
and development (R&D) for Aerostar and lower sales volume in
Applied Technology led to the year-over-year decline.
Sales increased 3% year over year to $92.6 million in the quarter
but missed the Zacks Consensus Estimate.
For the full year 2014, earnings per share fell 19% year over
year to $1.17, lagging the Zacks Consensus Estimate of $1.26.
Revenues fell 3% to $395 million from $406 million in the
previous fiscal, missing the Zacks Consensus Estimate.
For first-quarter fiscal 2015, Raven expects solid sales growth
in Engineered Films from agriculture, along with higher OEM
deliveries in Applied Technology. However, contract manufacturing
declines and the uncertain agricultural aftermarket will pose
In the first quarter, Raven expects profits to be flat to
slightly down. Thereafter, the company is expected to deliver
increased profits in the balance of the year. Nevertheless, delay
in contracts, pricing pressure, general market softness and
volatile raw-material costs will hurt Raven's earnings.
Following the fourth-quarter earnings announcement, the Zacks
Consensus Estimate for Raven declined 14% to $1.21 per share for
2015 and 15.9% to $1.32 per share for 2016.
Other Stocks to Consider
Some better-ranked stocks in the same industry include
Federal Signal Corp.
Noble Group Limited
). All these of these carry a Zacks Rank #1 (Strong Buy).