Strong Sell Rank for Barnes Group - Analyst Blog
15 Mai 2013 - 2:40PM
Zacks
Zacks Investment Research
downgraded Barnes Group Inc. (B) to a Zacks Rank
#5 (Strong sell) on May 11, 2013.
Why the
Downgrade?
Barnes Group reported its financial results for the first quarter
2013 on Apr 26, 2013. The aerospace and industrial manufacturer and
service provider reported adjusted earnings per share of 40 cents,
up roughly 25% year over year. However, the results fell 11.1%
short of the Zacks Consensus Estimate of 45 cents.
Revenue in the quarter grew 18.3% year over year, primarily due to
healthy performance in the Industrial segment. The impact of
revenue increase was, to a large extent, negated by 10.8% and 61.2%
increase in cost of sales and selling and administrative expenses,
respectively. Operating income grew a mere 1.4% while operating
margin fell 150 basis points. Results also suffered a downward
trend because of higher interest expense as well as income
taxes.
Talking of the coming quarters, Barnes Group anticipates recording
income tax charges to the tune of $20 million in the second quarter
2013. The company’s cash flows in the third quarter which are
expected to bear the brunt of the unfavorable ruling of the US Tax
Court will be negatively impacted by $13 million. An objection
against $16.5 million tax adjustment arising out of IRS audit has
been rejected by the court.
All these adverse developments contributed to the downward revision
in earnings estimate for Barnes Group. In the last 30 days, the
Zacks Consensus Estimate for 2013 has gone down by 10.7% to $1.91
while for 2014, the estimate plummeted 7.6% to $2.19.
Also, Barnes Group has a negative earnings surprise in three of
four trailing quarters with an average of -4.0%. Downward revision
in earnings estimate as well as negative earnings surprise together
with the unfavorable ruling raise skepticism over the financial
performance of the company in the quarters to come.
Other Stocks to Consider
Barnes Group currently has a market capitalization of $1.6 billion.
Other stocks to watch out for in the industry are Graco
Inc. (GGG) and Tri-Tech Holding, Inc.
(TRIT), each holding a Zacks Rank #1 (Strong Buy) while DXP
Enterprises, Inc. (DXPE) has a Zacks Rank #2 (Buy).
BARNES GRP (B): Free Stock Analysis Report
DXP ENTERPRISES (DXPE): Free Stock Analysis Report
GRACO INC (GGG): Free Stock Analysis Report
TRI-TECH HOLDNG (TRIT): Free Stock Analysis Report
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