We have issued an updated research report on Colfax CorporationCFX on Feb 9, 2016. This machinery company, with a market capitalization of $3.1 billion, specializes in manufacturing products and providing services related to gas & fluid handling, and fabrication technology.
The most striking features of Colfax are its diversified product portfolio and a large client base spread across the U.S., Europe, Asia, the Middle East and South America. Also, the company remains well positioned to benefit from its organic and inorganic growth initiatives. We believe these positives will help the company achieve its long-term targets.
However, the scenario is quite different in the near term for Colfax. The company is currently faced with headwinds from uncertain economic conditions and foreign currency movements. For 2016, the company anticipates its adjusted earnings within $1.40−$1.55 per share, below $1.60 earned in 2015; while revenues are projected in a range of $3.60−$3.75 billion, down from $3.97 billion reported in 2015.
To add to the woes, weak order flow, intense competition and geopolitical issues pose serious threats to Colfax's profitability. Also, as the company has to procure raw materials, including metals, castings, motors, seals and bearings, from suppliers both in the U.S. and international markets, it remains vulnerable to price fluctuations associated with policies and issues of the source countries.
We believe Colfax's exposure to headwinds has restricted its growth momentum, resulting in a low investment value for the stock in the near term. Currently, the company carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the machinery industry include II-VI Incorporated IIVI , Graco Inc. GGG and Kaman Corporation KAMN . While II-VI Incorporated sports a Zacks Rank #1 (Strong Buy), both Graco Inc. and Kaman Corporation carry a Zacks Rank #2 (Buy).