Haynes Down to Strong Sell - Analyst Blog
On Nov 30, Zacks Investment Research downgraded metal alloys
Haynes International, Inc.
) to a Zacks Rank #5 (Strong Sell).
Haynes posted disappointing fourth-quarter fiscal 2013 (ended Sep 30, 2013) results on Nov 21. Profit slumped around 69% year over year to $4 million, hurt by a double-digit fall in sales. The company's earnings of 32 cents per share were flat with the Zacks Consensus Estimate, but dropped 69% from $1.04 in the year-ago quarter. For fiscal 2013, Haynes' earnings of $1.74 per share declined 57% from $4.07 per share posted a year ago.
Haynes has delivered negative earnings surprises in two of the last four quarters with an average negative surprise of 9.88% for the trailing four quarters.
Revenues fell 23% year over year to $115.7 million in the fourth quarter, hit by weak market conditions, lower average selling prices and reduced sales volume. Sales missed the Zacks Consensus Estimate of $123 million. For the full year, sales declined 16.7% year over year to $482.7 million.
Volume contracted 10% year over year to 21 million pounds in fiscal 2013. Average selling price narrowed 7.4% year over year to $22.94 per pound in fiscal 2013 on account of reduced raw material prices, lower volume of conversion sales, increased competition and weak demand.
Haynes' consolidated backlog was $166.6 million as of Sep 30, 2013, down 25.3% year over year. The reduction in the backlog stemmed from lower order entry volumes, due to continued destocking in the supply chain.
Gross margin contracted to 15.3% in fiscal 2013 from 20.9% a year ago, impacted by pricing competition, higher-cost inventory in cost of sales and unfavorable absorption of fixed costs. Operating income fell 58.4% year over year to $32 million in fiscal 2013.
Moving ahead, Haynes remains optimistic about the growth potential of the aerospace, land-based gas turbine and chemical processing markets. However, for the first quarter of fiscal 2014, the company does not expect an increase in demand and thus intends to undergo maintenance at its manufacturing facilities over the holidays. As a result, Haynes expects revenues to drop sequentially in the first quarter and incur a net loss.
The Zacks Consensus Estimate for fiscal 2014 for Haynes has gone down roughly 27.8% to $2.23 per share since the fourth-quarter fiscal 2013 earnings release. The Zacks Consensus Estimate for fiscal 2015 has also declined 13% to $3.68 per share.
Other Stocks to Consider
Better-ranked stocks in the metal fabrication industry include NSK Ltd. ( NPSKY ), NN Inc. ( NNBR ) and Dynamic Materials Corp. ( BOOM ). All of them hold a Zacks Rank #1 (Strong Buy).
DYNAMIC MATLS (BOOM): Free Stock Analysis Report
HAYNES INTL INC (HAYN): Free Stock Analysis Report
NN INC (NNBR): Free Stock Analysis Report
NSK LTD -UN ADR (NPSKY): Get Free Report
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