Colfax (CFX) Shares Gain 41% in 3 Months: What's Driving It?

Shares of Colfax Corporation CFX have gained notably in the past three months. Growth opportunities anticipated for the second half of 2020, synergistic gains from acquired assets and cost-saving measures seem to have boosted sentiments for the stock.

The Fulton, MD-based company belongs to the Zacks Manufacturing - General Industrial industry. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, the company’s shares have gained 40.5% compared with the industry’s growth of 25.1%. Notably, the S&P 500 has risen 18.2% and the sector has grown 27.6% during the same period.


Factors Influencing the Stock

In the past three months, Colfax has reported results for first-quarter 2020, with an earnings beat of 2.7%. Also, results improved 2.7% on a year-over-year basis despite a 4.3% decline in revenues. The pandemic-related concerns made the company suspend its projections for 2020.

In addition, the overall revival in the broader market and Colfax’s expectation of improvement in product demand in the second half of 2020 might have supported the price improvement. Also, its cost-saving measures are expected to help it tide over the pandemic-related financial difficulties. As noted earlier, cost-savings in excess of $100 million might have benefited the company in the second quarter of 2020.

In addition, synergistic gains from acquired assets, solid product offerings and innovation efforts are other tailwinds for Colfax. In February 2019, the company acquired DJO Global. In first-quarter 2020, Colfax’s sales from continuing operations increased 19.4% year over year, including benefits from the DJO Global buyout. Notably, pro forma sales, excluding the buyout impact, declined 4.3% year over year.

Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.21 for 2020 and $1.88 for 2021, marking no change and increase of 0.5% from the respective 30-day-ago figures.

Also, earnings estimates for the second quarter have improved from 3 cents per share to 5 cents in the past 30 days. Such an upward revision in earnings estimates is reflective of improving operating conditions for the company.

Colfax’s Performance Versus Three Peers

The company outperformed three peers — including Kennametal Inc. KMT, Lincoln Electric Holdings, Inc. LECO and Graco Inc. GGG — in the past three months. During the period, Kennametal, Lincoln Electric and Graco’s shares have gained 21.7%, 23% and 17.5%, respectively.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lincoln Electric Holdings, Inc. (LECO): Free Stock Analysis Report
Graco Inc. (GGG): Free Stock Analysis Report
Colfax Corporation (CFX): Free Stock Analysis Report
Kennametal Inc. (KMT): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.