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Blount Downgraded to Strong Sell - Analyst Blog

Posted: 1/2/2014 5:35:00 PM
Referenced Stocks: AIMC;B;BLT;MIDD

Zacks Investment Research downgraded Blount International Inc. ( BLT ) to a Zacks Rank #5 (Strong Sell) on Jan 2, 2014.

Why the Downgrade?

Blount International's results for third-quarter 2013, announced on Nov 1, 2013, were disappointing. Earnings per share came in at 21 cents, down 8.7% year over year. However, the result was 5% above the Zacks Consensus Estimate of 20 cents.

Sales came in at $230.6 million, down 1% over the year-ago quarter, due primarily to weak performance at the Forestry, Lawn and Garden segment, offset partially by healthy performance in the Farm, Ranch and Agriculture segment.

With respect to costs/margins of Blount International, cost of sales in the quarter rose 1.0% year over year leading to roughly a 10 basis point decline in gross profit margin. Income tax expenses were a drag on the results as it skyrocketed roughly 266.9%.

For 2013, foreign currency headwind is expected to range within $1-$2 million; interest expense is predicted to be within $18-$19 million and tax rate to be within the 32%-35% range. Sales are expected to range within $905-$915 million, down 1.9% year over year, at the mid points. Forestry, Lawn and Garden sales are expected to be down 4%-5%, offset by an increase of 6%-7% anticipated in Farm, Ranch, and Agriculture segments' sales.

In the last 60 days, the Zacks Consensus Estimate for Blount International decreased 5.7% to 99 cents for 2014. This, along with negative average earnings surprise of 13.7% for the trailing quarters, raises concern over the company's performance in the quarters ahead.

Other Stocks to Consider

Blount International is a $714 million company manufacturing and marketing tools for forestry, lawn and garden, farm, ranch, agriculture and construction sectors.

Some better-ranked stocks in the machinery industry include Barnes Group Inc. ( B ), Middleby Corp. ( MIDD ) and Altra Industrial Motion Corp. ( AIMC ). While Barnes Group carries a Zacks Rank #1 (Strong Buy), Middleby and Altra Industrial carry a Zacks Rank #2 (Buy).

ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

BARNES GRP (B): Free Stock Analysis Report

BLOUNT INTL (BLT): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

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Zacks Investment Research