We issued an updated research report on Colfax Corporation CFX, a specialist in providing products and services related to gas & fluid handling and fabrication technology, on Jun 30, 2015. Certain headwinds have been weighing on the company’s long-term growth potential, thus weakening its investment value in the short run.
Colfax serves a wide range of customers in the U.S., Europe, Asia, the Middle East and South America. The company’s end-markets include power generation, oil, gas & petrochemical, mining, marine and general industrial as well as governmental contracts. Such markets are highly susceptible to global economic conditions. Also, sales, earnings and cash flow from international operations may face adverse impact from lower level of industrial activities in the countries served.
To add to the woes, weak order flow as well as vulnerability to price fluctuations associated with policies and issues of the countries which source raw material for Colfax, can pose serious threats to its profitability.
In first-quarter 2015, Colfax’s Gas and Fluid Handling business suffered weaknesses in power generation, marine and oil, and gas & petrochemical end-markets. Also, tough operating conditions and 11.2% negative foreign currency impact restricted the company’s top-line growth. For 2015, Colfax anticipates uncertain economic conditions to affect its organic growth. At the same time, foreign currency translation might hurt revenues and earnings.
Colfax, with a market capitalization of $5.7 billion, currently carries a Zacks Rank #4 (Sell). The ranking is justified by near-term concerns surrounding the stock that led to downward revisions in earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 1.4% to $2.06 per share for 2015 and 0.8% to $2.35 for 2016.
Also, some of Colfax’s prime competitors are performing well, having gained high Zacks investment rankings. Better-ranked stocks in the machinery industry include IDEX Corporation IEX, The Middleby Corp. MIDD and Omnitek Engineering Corp. OMTK, each carrying a Zacks Rank #2 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment