On Jun 1, Zacks Investment Research downgraded Briggs & Stratton Corporation (BGG) to Zacks Rank#5 (Strong Sell).
Why the Downgrade?
Briggs & Stratton’s share price and earnings estimates have witnessed a downward trend after reporting disappointing third quarter 2013 results and a trimmed fiscal 2013 guidance on Apr 19. Earnings estimates of this manufacturer of gasoline engines for lawn and garden equipment applications and portable generators have been on the downside due to a weak fiscal 2013 outlook, which was due to the soft demand across international markets and a slow start to the U.S. lawn and garden market this year.
Briggs & Stratton’s third-quarter 2013 adjusted earnings declined 10% year over year to 89 cents per share and also missed the Zacks Consensus Estimate of $1.08 by 18%. Results were affected by reduced sales of engines and products to international regions as well as by the company’s decision to stop selling lawn and garden products to large retailers in the U.S.
For fiscal 2013, Briggs & Stratton trimmed its net sales guidance from the range of $1.95 billion to $2.15 billion to the new range of $1.95 billion to $2.0 billion. The company now expects adjusted net income in the range of $56 million – $65 million, down from its previous guidance of $60 million – $75 million. Forecast for earnings per share has also been reduced from the range of $1.25 to $1.55 per share to the band of $1.16 to $1.33 per share.
Briggs & Stratton continues to witness weakness in sales in several of its international markets, particularly in Australia and New Zealand due to continued impact of drought conditions and in Europe owing to weak market conditions. In U.S., the spring lawn and garden season has been delayed due to a prolonged cold and wet spring in many parts of the country. This is unlike the previous year when spring had arrived early in the U.S. with significantly above average temperatures in February and March.
Over the last 60 days, the Zacks Consensus Estimate for Briggs & Stratton for fiscal 2013 decreased 17% to $1.15 per share; while for fiscal 2014 it went down 1% to $1.67 per share.
Other Stocks to Consider
Not all stocks in the same industry are performing as poorly as Briggs & Stratton. Other companies in the machinery and farm industry with favorable Zacks Ranks are Kubota Corporation (KUB) with a Zacks Rank#1 (Strong Buy), while Alamo Group, Inc. (ALG) and CNH Global NV (CNH) carry a Zacks Rank #2 (Buy).
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