We have issued an updated research report on Colfax Corporation CFX on Dec 22, 2015. The company’s exposure to headwinds has restricted its growth momentum, resulting in a low investment value for the stock in the near term.
This machinery company, with a market capitalization of $2.8 billion, specializes in manufacturing products and providing services related to gas & fluid handling, and fabrication technology. The company’s diversified product portfolio as well as its organic and inorganic initiatives to drive growth has expanded its customer base in the U.S., Europe, Asia, the Middle East and South America.
However, despite these tailwinds, Colfax is not immune to risks arising from uncertain economic conditions, geopolitical issues and adverse foreign currency movements. To add to the worries, weak order flow and intense competition pose serious threats to Colfax’s profitability.
Recently, at its Investors’ Day, Colfax communicated that its organic revenues are likely to fall in a range of 3.5−6% in 2016, including 5−7% drop in Fabrication Technology, 3−6% in Howden and 0−3% in Colfax Fluid Handling. Unfavorable foreign currency movements will hurt revenues by $140−$150 million.
Colfax currently carries a Zacks Rank #4 (Sell). Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 4.4% to 43 cents per share for fourth-quarter 2015 and 12.1% to $1.45 per share for 2016.
Better-ranked companies in the same sector include Codexis, Inc. CDXS, Unifi Inc. UFI and John Bean Technologies Corporation JBT. While Codexis sports a Zacks Rank #1 (Strong Buy), both Unifi and John Bean Technologies carry a Zacks Rank #2 (Buy).
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