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Bearish Stance on Chart Industries - Analyst Blog
Zacks Investment Research downgraded
Chart Industries Inc.
) to a Zacks Rank #5 (Strong Sell) on Feb 26, 2014. Going by the
Zacks model, the companies holding a Zacks Rank #5 have strong
chances of performing worse than the broader market and hence,
investors seeking exposure to metal fabrication companies are
recommended to either avoid investing in or to dispose-off their
existing holdings in Chart Industries.
Why the Downgrade?
Chart Industries' lackluster fourth-quarter 2013 results dampened market sentiments that led to nearly 10.0% fall in share price at the end of trading on Feb 25. Adjusted earnings per share were 82 cents compared with 80 cents recorded in the year-ago quarter and in line with the Zacks Consensus Estimate.
Revenues generated were $304 million, flat compared with the
year-ago quarter and 4.6% below the Zacks Consensus Estimate of
$319 million. Selling, general and administrative expenses
increased 3.1% year over year.
Adding to lower-than-expected top- and bottom-line results, was Chart Industries' guidance for 2014 which gave no reason to rejoice either. Revenues are expected within a range of $1.3-$1.35 billion while earnings per share are expected to be within the $3.10-$3.50 range.
Fourth-quarter 2013 results triggered downward revisions in earnings estimates for Chart Industries. In the last 7 days, the Zacks Consensus Estimate has fallen 9.4% to $3.38 for 2014 and 3.5% to $4.63 for 2015. Lowered earnings estimates along with a negative 13.5% average earnings surprise have made us dubious about Chart Industries' performance in the coming quarters. We currently have an Earnings ESP of -6.9% for the first quarter 2014 and -1.3% for the second quarter.
Other Stocks to Consider
Chart Industries is a $2.5 billion company. Some better-ranked stocks in the same industry include DXP Enterprises, Inc. ( DXPE ), Kadant Inc. ( KAI ) and Middleby Corp. ( MIDD ), all of which carry a Zacks Rank #1 (Strong Buy).
DXP ENTERPRISES (DXPE): Free Stock Analysis Report
CHART INDUSTRIE (GTLS): Free Stock Analysis Report
KADANT INC (KAI): Free Stock Analysis Report
MIDDLEBY CORP (MIDD): Free Stock Analysis Report
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Zacks Investment Research