Zacks Investment Research downgraded Colfax Corporation (CFX) to a Zacks Rank #5 (Strong Sell) on Dec 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?
Colfax’s result in third-quarter 2014 was no better than the previous two quarters. The bottom line fell below expectation, with a negative earnings surprise of 6.56%. Also, the share price has fallen nearly 5.1% since Oct 23.
Adjusted earnings came in at 57 cents per share versus the Zacks Consensus Estimate of 61 cents. Organic revenues decreased 3.8%, due primarily to a sales decline in end markets like power generation, general industrial, and oil, gas & petrochemical. Also, foreign currency translation had adversely impacted top-line growth by 1.3%.
For 2014, Colfax lowered its sales guidance to a range of $4.675−$4.725 billion from the prior projection of $4.7−$4.8 billion. Adjusted earnings are estimated within $2.11−$2.18 per share, down from $2.20−$2.35 forecasted previously.
Dismal performance in third-quarter 2014, as well as a reduced 2014 outlook, resulted in downward revisions in earnings estimates for Colfax Corporation. Over the last 60 days, the Zacks Consensus has decreased 1.8% to $2.13 for 2014 and 13.2% to $2.31 for 2015. Moreover, the company has an Earnings ESP of -0.47% for 2014 and -0.43% for 2015.
Other Stocks to Consider
Colfax Corporation has a current market capitalization of $6.5 billion. Some better-ranked stocks in the machinery industry include Blount International Inc. (BLT), The Middleby Corporation (MIDD) and Sun Hydraulics Corporation (SNHY). All these stocks sport a Zacks Rank #1 (Strong Buy).
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