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Analyst Blog

Shares of Colfax Corporation (CFX - Analyst Report) touched a new 52-week high of $63.35 during the trading session on Dec 24. This is an increase over the previous high of $63.24 reached on Dec 23.  

Colfax’s shares closed at $63.06 at the end of trading on Dec 24, with a solid year-to-date return of 50.2%. The volume of shares traded during that session was 0.89 million shares. Further upside potential exists for this Zacks Rank #3 (Hold) manufacturing and engineering company as reflected by its earnings growth rate of 36.5% for the next five years and year-over-year growth rate of 30.3% for 2014.

Growth Drivers

Colfax hosted its Annual Investor Meet on Dec 17, 2013. Post this event the company’s shares rose 2.6% which indicates favorable impact on the market from the meet.

Colfax provided its expectations for 2014. It anticipates organic revenue growth within 1%–3%; including 2%–4% growth in Fluid Handling, 4%–6% growth in Howden and 1%–2% growth in Fabrication Technology. Total revenue is anticipated to be within the $4.5–$4.625 billion range.

Adjusted earnings per share are estimated within the $2.40–$2.65 band, excluding 43 cents from restructuring costs and 6 cents from tax adjustments. This is an increase over the earnings per share range of $1.98–$2.03 for 2013.

Colfax also reiterated its long-term targets which include organic growth achievement of 1–2% above GDP growth, operating margins in the mid-teens level and free cash flow in excess of net income.

Estimate Revisions Show Potency

Over the last 30 days, the Zacks Consensus Estimate for Colfax Corporation has increased by 3.2% to $2.60 for 2014. This indicates improved performances in the coming quarters.
 
Colfax Corporation currently has a market capitalization of $6.4 billion. Some better-ranked companies in the same industry include Xylem Inc. (XYL - Analyst Report), DXP Enterprises, Inc. and Middleby Corp. (MIDD - Analyst Report). While Xylem carries a Zacks Rank #1 (Strong Buy), both DXP and Middleby hold a Zacks Rank #2 (Buy).
 

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