What Makes Sun Hydraulics Corp. (SNHY) A Strong Sell?
Zacks Investment Research downgraded Sun Hydraulics Corp.SNHY to a Zacks Rank #5 (Strong Sell) on Jun 14, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.
Why the Downgrade?
Market sentiments are against Sun Hydraulics, with the share price down 13%, since the company announced first-quarter 2016 results on May 9. As reported, the company's earnings per share came in at 31 cents, lagging the Zacks Consensus Estimate of 32 cents by 3.1%. Also, net sales declined 6% from the year-ago quarter due to difficult operating conditions globally. Geographically, sales decreased 4.5% in the Americas, 5.6% in Europe/Africa/Middle East, and 10.5% in Asia/Pacific.
For 2016, Sun Hydraulics anticipates improvement in economic activities in the second half of the year, while predicts mixed operating conditions in the second quarter. The company expects revenues to be roughly $50 million in the second quarter, representing a 7% decline from the year-ago quarter. Earnings are projected to be within 25−27 cents per share range, below 35 cents recorded in the year-ago quarter. The earnings forecasts include 3 cents per share of negative foreign currency impact, 2 cents of CEO transition expenses and adverse impacts from lower volumes.
Post the dismal first quarter results, investors have become skeptical about Sun Hydraulics' prospects. Over the last 60 days, the Zacks Consensus Estimate for earnings has fallen 12.5% to $1.05 per share for 2016 and 3.8% to $1.25 for 2017.
SUN HYDRAULICS Price and Consensus
Stocks to Consider
Though Sun Hydraulics with a current market capitalization of $799 million is off the investors' radar, there are some machinery stocks with higher investment values. These stocks include GRC , Kadant Inc. KAI and Luxfer Holdings PLC LXFR , both sporting a Zacks Rank #1 (Strong Buy).