Stock to Avoid: EnPro Industries - Analyst Blog


Zacks Investment Research downgraded EnPro Industries, Inc. ( NPO ) to a Zacks Rank #5 (Strong Sell) on May 3, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.

Why the Downgrade?

EnPro Industries' first quarter 2014 results failed to impress its shareholders and the market as evidenced by a downward revision in earnings estimates and a fall of 1.98% in the company's share price since May 1, 2014. A snapshot of the quarter's results is provided below.

The company reported adjusted earnings per share of 39 cents as against 56 cents in the year-ago quarter. The bottom-line result also lagged the Zacks Consensus Estimate of 54 cents by 27.8%. Revenues at $287.2 million were relatively flat year over year.

Gross profit increased 2.4% year over year while an 80 basis points (bps) hike was recorded in the gross margin. Operating expenses grew 7.6% offsetting the improvement achieved at the gross profit level and led to a fall of nearly 15.9% in the operating income. Operating margin in the quarter declined 110 bps.

In the last 7 days, the Zacks Consensus Estimate for EnPro Industries has decreased 6.1% to $2.29 per share for 2014 and by 3.4% to $2.83 per share for 2015.

Weak results and lowered earnings estimates coupled with a negative earnings surprise of 2.83% for the trailing four quarters have made us skeptical about EnPro Industries' performance in the coming quarters. Currently, the company has an Earnings ESP of -11.79% for 2014 and -2.83% for 2015.

Other Stocks to Consider

EnPro Industries presently has a market capitalization of $1.79 billion. Other stocks worth considering in the industry include Gorman-Rupp Co. ( GRC ), Illinois Tool Works Inc. ( ITW ) and IDEX Corp. ( IEX ). While Gorman-Rupp carries a Zacks Rank #1 (Strong Buy), Illinois Tool Works and IDEX both hold a Zacks Rank #2 (Buy).

ENPRO INDUS INC (NPO): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: NPO

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