Zacks Investment Research downgraded Chart Industries Inc. (GTLS) to a Zacks Rank #5 (Strong Sell) on Aug 26, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Chart Industries’ lower-than-expected results for second-quarter 2014 have weakened market sentiments for the company. Since Jul 31, the company’s share price has fallen 13.4% while volumes traded have declined 3.1%.
A snapshot of the quarterly result will justify the share price fall subsequent to the earnings release. Adjusted earnings of 70 cents per share came below 77 cents earned in the year-ago quarter. The bottom-line also lagged the Zacks Consensus Estimate of 75 cents.
Revenues grew by 3% year over year on the back of healthy Energy & Chemicals and Distribution & Storage sales, partially offset by a fall in BioMedical sales. Cost of sales increased 3%, with the gross margin coming in at 30% versus 30.1% recorded in the prior-year quarter. Backlog was down 4% sequentially.
For 2014, Chart Industries has downscaled its revenue guidance to a range of $1.22−$1.27 billion from $1.25−$1.3 billion expected earlier. Earnings are anticipated to come within $2.85−$3.15 per share, down compared with the prior projection of $3.00−$3.40.
Lackluster results and lowered outlook have triggered downward revision in earnings estimates for Chart Industries. Over the past 30 days, the Zacks Consensus Estimate has decreased 5.8% to $2.91 for 2014 and 5.1% to $3.71 for 2015.
Other Stocks to Consider
Chart Industries presently has a market capitalization of $2.1 billion. Some better-ranked stocks in the industry include DXP Enterprises, Inc. (DXPE), IDEX Corporation (IEX) and Atlas Copco AB (ATLKY). All these stocks hold a Zacks Rank #2 (Buy).
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