Back to top

Analyst Blog

On Nov 30, Zacks Investment Research downgraded metal alloys maker Haynes International, Inc. (HAYN - Snapshot Report) to a Zacks Rank #5 (Strong Sell).

Why Downgraded?

Haynes posted disappointing fourth-quarter fiscal 2013 (ended Sep 30, 2013) results on Nov 21. Profit slumped around 69% year over year to $4 million, hurt by a double-digit fall in sales. The company’s earnings of 32 cents per share were flat with the Zacks Consensus Estimate, but dropped 69% from $1.04 in the year-ago quarter. For fiscal 2013, Haynes’ earnings of $1.74 per share declined 57% from $4.07 per share posted a year ago.

Haynes has delivered negative earnings surprises in two of the last four quarters with an average negative surprise of 9.88% for the trailing four quarters.

Revenues fell 23% year over year to $115.7 million in the fourth quarter, hit by weak market conditions, lower average selling prices and reduced sales volume. Sales missed the Zacks Consensus Estimate of $123 million. For the full year, sales declined 16.7% year over year to $482.7 million.

Volume contracted 10% year over year to 21 million pounds in fiscal 2013. Average selling price narrowed 7.4% year over year to $22.94 per pound in fiscal 2013 on account of reduced raw material prices, lower volume of conversion sales, increased competition and weak demand.

Haynes’ consolidated backlog was $166.6 million as of Sep 30, 2013, down 25.3% year over year. The reduction in the backlog stemmed from lower order entry volumes, due to continued destocking in the supply chain.
 
Gross margin contracted to 15.3% in fiscal 2013 from 20.9% a year ago, impacted by pricing competition, higher-cost inventory in cost of sales and unfavorable absorption of fixed costs. Operating income fell 58.4% year over year to $32 million in fiscal 2013.

Moving ahead, Haynes remains optimistic about the growth potential of the aerospace, land-based gas turbine and chemical processing markets. However, for the first quarter of fiscal 2014, the company does not expect an increase in demand and thus intends to undergo maintenance at its manufacturing facilities over the holidays. As a result, Haynes expects revenues to drop sequentially in the first quarter and incur a net loss.

The Zacks Consensus Estimate for fiscal 2014 for Haynes has gone down roughly 27.8% to $2.23 per share since the fourth-quarter fiscal 2013 earnings release. The Zacks Consensus Estimate for fiscal 2015 has also declined 13% to $3.68 per share.

Other Stocks to Consider

Better-ranked stocks in the metal fabrication industry include NSK Ltd. (NPSKY), NN Inc. (NNBR - Snapshot Report) and Dynamic Materials Corp. (BOOM - Snapshot Report). All of them hold a Zacks Rank #1 (Strong Buy).
 

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

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%