Zacks Investment Research downgraded
Barnes Group Inc.
) to a Zacks Rank #5 (Strong sell) on May 11, 2013.
Why the Downgrade?
Barnes Group reported its financial results for the first quarter
2013 on Apr 26, 2013. The aerospace and industrial manufacturer
and service provider reported adjusted earnings per share of 40
cents, up roughly 25% year over year. However, the results fell
11.1% short of the Zacks Consensus Estimate of 45 cents.
Revenue in the quarter grew 18.3% year over year, primarily due
to healthy performance in the Industrial segment. The impact of
revenue increase was, to a large extent, negated by 10.8% and
61.2% increase in cost of sales and selling and administrative
expenses, respectively. Operating income grew a mere 1.4% while
operating margin fell 150 basis points. Results also suffered a
downward trend because of higher interest expense as well as
Talking of the coming quarters, Barnes Group anticipates
recording income tax charges to the tune of $20 million in the
second quarter 2013. The company's cash flows in the third
quarter which are expected to bear the brunt of the unfavorable
ruling of the US Tax Court will be negatively impacted by $13
million. An objection against $16.5 million tax adjustment
arising out of IRS audit has been rejected by the court.
All these adverse developments contributed to the downward
revision in earnings estimate for Barnes Group. In the last 30
days, the Zacks Consensus Estimate for 2013 has gone down by
10.7% to $1.91 while for 2014, the estimate plummeted 7.6% to
Also, Barnes Group has a negative earnings surprise in three of
four trailing quarters with an average of -4.0%. Downward
revision in earnings estimate as well as negative earnings
surprise together with the unfavorable ruling raise skepticism
over the financial performance of the company in the quarters to
Other Stocks to Consider
Barnes Group currently has a market capitalization of $1.6
billion. Other stocks to watch out for in the industry are
Tri-Tech Holding, Inc.
), each holding a Zacks Rank #1 (Strong Buy) while
DXP Enterprises, Inc.
) has a Zacks Rank #2 (Buy).
BARNES GRP (B): Free Stock Analysis Report
DXP ENTERPRISES (DXPE): Free Stock Analysis
GRACO INC (GGG): Free Stock Analysis Report
TRI-TECH HOLDNG (TRIT): Free Stock Analysis
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