Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on Jul 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?
Market sentiments remained weak for Zep Inc. after the company
reported its third-quarter fiscal 2014 (ended May 31) results on
Jul 10. Since then, the share price has fallen 6.1%, while earnings
estimates have been revised downwards, clearly depicting a gloomy
outlook for fiscal years 2014 and 2015. A brief discussion on the
company's results is provided below:
Zep Inc's adjusted earnings came in at 39 cents per share, up 14.7%
year over year and 2.6% above the Zacks Consensus Estimate of 38
cents. Despite the improvement in earnings, quality of growth was
poor. Revenues rose a meager 0.6% while cost of sales climbed 1.1%.
Gross margin was down by 20 basis points. Long-term debt escalated
9.1% while cash flow from operating activities in the nine months
ended May 31, 2014 shrunk 58.4%.
Over the last seven days, the Zacks Consensus Estimate for Zep Inc.
has decreased by 2.7% to 36 cents for fiscal fourth-quarter, 4.0%
to 97 cents for fiscal 2014 and 4.2% to $1.13 for fiscal 2015.
Lowered estimates have made us doubtful about the company's
performance in the quarters ahead. Currently, the company has an
of -8.3% for fourth quarter, -7.2% for 2014 and -8.0% for 2015.
Other Stocks to Consider
Zep, Inc. has a market capitalization of $389.1 million. Some
better-ranked stocks in the industry include
Green Plains Inc.
Minerals Technologies Inc.
NL Industries Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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ZEP INC (ZEP): Free Stock Analysis Report
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