Zacks Investment Research downgraded
Regal Beloit Corporation
) to a Zacks Rank #5 (Strong Sell) on Sep 5, 2013.
Why the Downgrade?
Regal Beloit Corporation's performance for the second quarter
2013, reported on Jul 30, were quite disappointing as the company
reported earnings per share of $1.13, down 24.2% year over year
and 9.6% below the Zacks Consensus Estimate of $1.25.
Year-to-date return for the stock is a negative
Net sales declined 4.9% year over year due to the continued
challenging macroeconomic environment and also lagged behind the
Zacks Consensus Estimate of $823 million. Revenue generation was
weak at the Electrical and Mechanical segments as a
year-over-year decline of 3.9% and 14.4% respectively were
Talking of margins and profits, Regal Beloit's gross profit was
down 5.0% and gross margin was flat at 25.5%. Operating expenses
in the quarter increased 9.7% while operating profit declined
21.5% year over year.
For 2013, management of Regal Beloit expects unfavorable market
dynamics in the HVAC sub-segment. GAAP earnings and adjusted
earnings have been guided in the range of $1.08 to $1.16 and
$1.10 to $1.18 per share, respectively.
Weak results have led to downward revision in earnings estimates
for Regal Beloit in the last 60 days. The Zacks Consensus
Estimate has gone down by 5.7% to $4.16 for 2013 and has declined
4.6% to $4.82 for 2014.
Regal Beloit had negative earnings surprise in three out of four
trailing quarters, with the average being a negative 4.2%. Also,
we have an Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of -3.6% and -3.9% for 2013 and 2014, respectively.
Other Stocks to Consider
Regal Beloit deals with manufacture and sales of electric motors
and controls, electric generators and controls, and mechanical
motion control products. The company currently has a $2.9 billion
Other stocks to look out for in the industry include
), with a Zacks Rank #1 (Strong Buy) while
Plug Power Inc.
AO Smith Corp.
), each hold a Zacks Rank #2 (Buy).
SMITH (AO) CORP (AOS): Free Stock Analysis
PLUG POWER INC (PLUG): Free Stock Analysis
REGAL BELOIT (RBC): Free Stock Analysis
REXNORD CORP (RXN): Free Stock Analysis
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