Shares of Colfax Corporation (CFX) touched a new 52-week high of $56.28 during its trading session on Sep 11. This represents an increase of 0.3% over its previous high of $56.10.
Colfax closed the trading day on Sep 11 at $55.72, reflecting a solid year-to-date return of 65.0%. The trading volume for the session was 0.2 million shares. We believe that this Zacks Rank #3 (Hold) stock has the potential to experience further upsides, reflected by the upward revision in earnings estimates over the past 60 days and the expected growth rate of 50.8% for 2013.
Growth Drivers
Colfax’s financial results for the second quarter 2013 were impressive. The company on Jul 25, 2013 reported adjusted earnings per share of 54 cents, an increase of 60% over the year-ago quarter and a cent above the Zacks Consensus Estimate of 53 cents.
Revenues in the quarter grew 2.7% year over year due to higher contribution from acquisitions, partially offset by negative foreign currency translation adjustments and decline in organic revenue.
Total orders in the quarter were $478.2 million while backlog at the end of the quarter stood at $1,388.4 million, compared with $1,375.9 million at the end of second quarter 2012. Colfax’s adjusted operating income margin expanded 160 basis points year over year to 10.9% in the quarter.
Also, Colfax recently announced to have signed an agreement to acquire the Global Infrastructure and Industry (GII) business of Flakt Woods Group. Acquisition of GII will strengthen the company’s Howden business through its broad product portfolio and large customer base and will add revenue generation capacity of approximately $225 million.
Moreover, Colfax managed to beat estimates in the trailing 4 quarters with an average positive earnings surprise of 7.0%. This, along with impressive results in the second quarter, has raised optimism for better performance ahead.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for Colfax increased by 1.5% to $2.02 per share for 2013.
Other companies to look out for are Gorman-Rupp Co. (GRC) and Graham Corp. (GHM), each carrying a Zacks Rank #1 (Strong Buy) while DXP Enterprises, Inc. (DXPE) holds a Zacks Rank #2 (Buy).
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