Briggs & Stratton Corporation BGG has been losing momentum following its disappointing first-quarter fiscal 2016 results, reported on Oct 29, 2014. The company hit a 52-week low of $16.63 on Dec 15. Since its earnings release, Briggs & Stratton's shares dropped roughly 10.5% closing at $16.84 yesterday with a negative year-to-date return of 17.5%.
What Led to the Drop?
Briggs & Stratton's net sales in the first quarter decreased 1.1% year over year to $289 million, primarily due to unfavorable foreign currency impact, related to the weakening of euro, Australian dollar and Brazilian real.
Briggs & Stratton has reaffirmed its fiscal 2016 projections for net income in the range of $54 million to $61 million or $1.20 to $1.36 per share. The company remains cautious about the global economy and its role in further weakening foreign currencies. Continued weakness in the oil and gas market also remains headwind.
Notably, Briggs & Stratton acquired Allmand Brothers during the first quarter of fiscal 2015. A large portion of Allmand's business sold into the domestic oil and gas industry. With the significant decline in oil prices to below $50 per barrel over the past year, capital spending of domestic oil and gas companies has reduced considerably. This may hurt growth of Briggs & Stratton.
Additionally, most of the estimates for this Zacks Rank #3 (Hold) company have moved south, following the weak guidance. In the past 60 days, the Zacks Consensus Estimate for fiscal 2016 decreased 1.5% to $4.87 per share and for fiscal 2017 the same reduced 0.7% to $1.45 per share.
Stocks to Consider
Some better-ranked stocks in the same sector include Albany International Corp. AIN, Brady Corp. BRC and Codexis, Inc. CDXS. All these stocks carry a Zacks Rank #1 (Strong Buy).
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