Back to top

Analyst Blog

Zacks Investment Research downgraded Altra Holdings, Inc. (AIMC - Snapshot Report) to a Zacks Rank #5 (Strong Sell) on Jul 27, based on weak second-quarter 2013 results combined with a weak outlook for the quarters ahead.

Why the Downgrade?

Altra reported earnings per share of 41 cents in the second quarter of 2013, missing the Zacks Consensus Estimate by 12.8%. Revenues came in at $181.1 million, missing the Zacks Consensus Estimate of $189.0 million as well as the year-ago quarter’s revenues by 3.6%.

The decline was brought about by a downturn in demand of the capital-intensive end markets like metals, mining and energy. Moreover, demands in North America and Asia were lower than expected. Margins also faced a decline in the quarter owing to higher selling, general and administrative (SG&A) expenses. The trend is expected to continue in the coming quarters as well.

Accordingly, Altra has reduced its outlook for 2013. The company expects revenues in the range of $715.0 million to $730.0 million in 2013, down from $740.0 million to $750.0 million as expected earlier. Moreover, Altra lowered its earnings per share expectation to a range of $1.52 to $1.64 from $1.75 to $1.85 as expected before.

Subsequent to the results, Altra witnessed a downward revision for most of its estimates for years 2013 and 2014. All the estimates have been revised downwards for 2013, resulting in a decline in the Zacks Consensus Estimate by 8.2% to $1.67 per share, over the last 7 days. The Zacks Consensus Estimate for 2014 was also reduced by 5.7% to $1.99 per share in the same period.

Other Stocks to Consider

Other machinery stocks that are worth a look include Gorman-Rupp Co. (GRC - Snapshot Report), Chart Industries Inc. (GTLS - Snapshot Report) and Dover Corporation (DOV - Analyst Report). While Gorman-Rupp carries a Zacks Rank #1 (Strong Buy), Chart Industries and Dover Corporation carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.