Strong Sell on Luxfer Holdings - Analyst Blog


Zacks Investment Research downgraded Luxfer Holdings plc ( LXFR ) to a Zacks Rank #5 (Strong Sell) on Jan 7, 2014.

Why the Downgrade?

Luxfer Holdings' third quarter 2013 results, reported on Nov 2013, were disappointing as adjusted net income fell 7.9% year over year. Earnings per ADS of 33 cents were roughly 5.7% below the Zacks Consensus Estimate of 35 cents.

Revenues in the quarter were up 4.7% year over year on the back of healthy performance at the company's Gas Cylinders Division, offset by a 2.5% revenue shortfall recorded at the Elektron Division.

Talking of expenses and margins, cost of sales in the quarter represented 75.8% of total revenues, an increase from 74.1% reported in the year-ago quarter. Adjusted EBITDA margin in the quarter was down 210 basis points.

Luxfer Holdings expects the European markets to cast a negative impact on fourth-quarter earnings results. For 2013, trading profit is expected to be on the lower end of the previously announced $60.5 million to $63.5 million range. Moreover, earnings per ADS are expected in the range of $1.40 to $1.43.

In the last 60 days, the Zacks Consensus Estimate for Luxfer Holdings has gone down by 1.4% to $1.40 for 2013 and by 5.8% to $1.62 for 2014. Downward revision in earnings estimates as well as negative average earnings surprise of 1.24% for the trailing four quarters raises skepticism over future performance. Currently, we have an Earnings ESP of -2.7% for the fourth quarter 2013, -0.7% for 2013 and -1.2% for 2014.

Other Stocks to Consider

Luxfer Holdings currently has a market capitalization of $571.6 million and operates in the diversified machinery industry. Some-better ranked stocks in the industry include Middleby Corp. ( MIDD ), Altra Industrial Motion Corp. ( AIMC ) and Magna International Inc. ( MGA ). While Middleby holds a Zacks Rank #1 (Strong Buy), both Altra Industrial and Magna International carry a Zacks Rank #2 (Buy).

ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

LUXFER HOLDINGS (LXFR): Free Stock Analysis Report

MAGNA INTL CL A (MGA): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): 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: AIMC , LXFR , MGA , MIDD

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