Stock to Avoid: II-VI Inc. - Analyst Blog

By
A A A

Zacks Investment Research downgraded II-VI Incorporated ( IIVI ) to a Zacks Rank #5 (Strong Sell) on Mar 12, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.

Why the Downgrade?

Shares of II-VI Incorporated fell 4.6% after the company released its second-quarter fiscal 2014 (ended Dec 31, 2013) results on Jan 28. Adjusted earnings per share from continuing operations were 13 cents, down 38.1% year over year. The bottom-line result also fell short of the Zacks Consensus Estimate of 17 cents.      

Revenues in the quarter increased 37.3% year over year to $171.8 million. The top-line growth was partially offset by an increase of 52.1% in cost of sales leading to a contraction of roughly 670 basis points (bps) in gross margin. Operating expenses in the quarter increased 59.3% year over year.

Fiscal second-quarter 2014 results triggered downward revisions in earnings estimates for II-VI Incorporated. In the last 30 days, the Zacks Consensus Estimate has decreased 13.6% to 76 cents for fiscal 2014 and by 5.0% to $1.13 for fiscal 2015. The estimate for fiscal 2014 reflects a year-over-year decline of 16.5%.

Disappointing second-quarter results as well as a negative average earnings surprise of 3.3% have made us dubious about II-VI Incorporated's performance in the coming quarters.

Other Stocks to Consider

II-VI Incorporated is a $1.03 billion company operating in the machinery industry. Some better-ranked stocks in the industry include EnerSys ( ENS ), Franklin Electric Co., Inc. ( FELE ) and Komatsu Ltd. ( KMTUY ), all of which carry a Zacks Rank #2 (Buy).



ENERSYS INC (ENS): Free Stock Analysis Report

FRANKLIN ELEC (FELE): Free Stock Analysis Report

II-VI INCORP (IIVI): Free Stock Analysis Report

KOMATSU LTD ADR (KMTUY): Get Free Report

To read this article on Zacks.com click here.

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: ENS , FELE , IIVI , KMTUY

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

100%
100%
100%

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com