Zacks Investment Research downgraded Harsco Corporation (HSC) to a Zacks Rank #5 (Strong Sell) on Dec 11, 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?
Shares of Harsco Corporation have suffered a decline of 13.6% since the release of third-quarter 2014 results on Nov 6. The company reported adjusted earnings of 32 cents per share, above both the Zacks Consensus Estimate of 29 cents per share and the year-ago earnings of 20 cents. However, the quality of bottom-line growth depicted weakness.
Revenues declined 28.9% year over year due primarily to a 40.2% fall in Services revenues. Cost of products sold increased 6.8% year over year. The company’s cash and cash equivalents declined to $72.6 million as compared with $93.6 million on Dec 31, 2013.
For 2014, Harsco Corporation lowered its adjusted earnings forecast to a range of 76 − 80 cents per share from the prior projection of 92 cents − $1.04 per share. Adjusted operating income is presently anticipated within $152 − $157 million from $170 − $180 million expected earlier.
Dismal performance in third-quarter 2014 as well as a reduced 2014 outlook led to downward revisions in earnings estimates for Harsco Corporation. Over the last 60 days, the Zacks Consensus has decreased by 16.8% to 79 cents per share for 2014 and by 14.5% to $1.18 for 2015.
Other Stocks to Consider
Harsco Corporation currently has a $1.5 billion market capitalization. Some better-ranked stocks in the industrial services sector include Allegion plc Ordinary Shares (ALLE), Net 1 Ueps Technologies Inc. (UEPS) and ScanSource, Inc. (SCSC). While Allegion plc Ordinary Shares and Net 1 Ueps Technologies sport a Zacks Rank #1 (Strong Buy), ScanSource carries a Zacks Rank #2 (Buy).
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