We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Consider Buying Colfax (CFX) Stock Now
Read MoreHide Full Article
The U.S. equity market, as well as the global economy, has been jittery over the rising trade tensions between the United States and other foreign nations, especially China, over the past few months. The Trump administration’s decision to bring in another $200 billion worth of Chinese imports under the tariff bracket, as announced yesterday, has heightened the chances of a possible escalation in the international trade dispute.
Amid all the worries, certain tailwinds, currently prevailing, can help to strengthen investors’ confidence in the U.S. economy. We believe the advancing industrial sector of the country — as evident from growing industrial production — can be encouraging. It’s worth noting here that the U.S. industrial production grew roughly 4.9% year over year in August 2018, way ahead of 2.8% increase recorded in January.
Moreover, a healthy job market, strengthening housing markets, government’s focus on infrastructural development, favorable changes in tax policies implemented in December last year and others will be beneficial.
Currently, the U.S. economy offers various investment-friendly options. Industrial Products, one of the 16 Zacks sectors, can be worth investing in. The sector currently occupies the fourth position in the Zacks sector list. Its performance in the past year has been impressive, as evident from 5.8% return yielded during the period.
For 2018, the sector's earnings are predicted to increase 24.2% year over year while revenues are projected to grow 9.6%. There are many prevailing tailwinds that underpin the sector’s solid growth prospects, of which few are discussed below:
Of many investment-worthy stocks within the sector, we believe that adding Colfax Corporation to the portfolio will be a smart choice. The stock, with a market capitalization of approximately $4.2 billion, currently sports a Zacks Rank #1 (Strong Buy). In the past three months, the company’s shares have yielded 17.4% return, outperforming 11% growth recorded by the industry.
Let's delve deeper and discuss why Colfax is a suitable investment option.
Bottom-Line Performance & Projections: Colfax’s financial performance has remained better than expected in three out of the last four quarters. Average earnings surprise was a positive 7.91%. This average includes the impact of 15.09% earnings beat recorded in the second quarter of 2018. On a year-over-year basis, the company's bottom line in the second quarter increased 35.6% on the back of sales growth and lower tax rates.
For 2018, the company anticipates gaining from its strengthening Fabrication Technology, and Air & Gas Handling business segments. Further, lower tax rates — estimated at 20-22% versus 23-24% expected earlier — would be beneficial. It raised earnings projection for the year to $2.15-$2.30 per share against previous estimates of $2.05-$2.20. It’s worth noting here that the mid-point of the revised guidance represents year-over-year growth of 24%.
In the past 60 days, driven by solid performance and outlook, earnings estimates on Colfax for both 2018 and 2019 have been increased by 10 brokerage firms. Currently, the Zack Consensus Estimate for earnings is pegged at $2.25 for 2018 and $2.50 for 2019, reflecting growth of 5.6% and 7.3% from the respective 60-day-ago tallies. Furthermore, the company’s earnings in the next five years are projected to grow 12.8%.
Solid Top Line: In the second quarter of 2018, Colfax’s top-line growth of 9.1% compared with the year-ago comparable quarter was driven by forex tailwinds and gains from acquired assets, partially offset by decline in existing businesses. For the Air and Gas Handling segment, sales grew 3.2% year over year while that for Fabrication Technology segment increased 13.4%.
The Fabrication Technology segment is likely to gain from impressive market conditions and favorable pricing. Its organic sales are projected to improve 5-8% in 2018. Moreover, profitability for Air & Gas Handling segment will improve on the back of order growth, and efficient cost structure.
In addition to these, Colfax is constantly engaged in improving business in emerging markets, including China, India, Brazil and others. Such advancement will help in boosting top-line growth prospects. Over the long run (three to five years), the company anticipates organic sales growth of 1-2% above GDP.
The Zacks Consensus Estimate for revenues on the stock is currently pegged at $3.7 billion for 2018 and $3.8 billion for 2019, reflecting year-over-year growth of 3.9% and 4.1%, respectively.
Reward to Shareholders: Colfax believes in rewarding shareholders handsomely, especially through share buybacks. In the second quarter of 2018, it used roughly $144 million in cash for repurchasing shares. It's worth mentioning here that the company repurchased 6.4 million shares since May 2018, completing $200-million share buyback program.
Inorganic Activities: Another interesting aspect about Colfax is its acquisitive nature.
Over time, the company has solidified its product portfolio and leveraged business opportunities through the addition of assets. Here, buyouts of TBi, HKS and Siemens AG's Siemens Turbomachinery Equipment GmbH business in 2017 are worth mentioning. Further, its Fabrication Technology segment gained new strength through the addition of Sandvik Materials Technology's welding-wire operations in the first quarter of 2018.
Additionally, during the second quarter of 2018, the company decided to acquire Europe-based Gas Control Equipment. This buyout will be integrated into the company’s Fabrication Technology segment and will likely generate annualized revenues in excess of $100 million in the future.
In the second quarter of 2018, acquired assets contributed 8.3% to sales growth. Moreover, buyouts added 12.1% to Air and Gas Handling segment, and 5.5% to Fabrication Technology segment.
Other Stocks to Consider
Three other top-ranked stocks in the industry are Altra Industrial Motion Corp. , Barnes Group Inc. (B - Free Report) and IDEX Corporation (IEX - Free Report) . While Altra Industrial sports a Zacks Rank #1, both Barnes and IDEX carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these stocks have improved for the current and the next year. Further, average positive earnings surprise for the last four quarters was 4.01% for Altra Industrial, 6.88% for Barnes Group and 4.37% for IDEX.
5 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
Image: Bigstock
Here's Why You Should Consider Buying Colfax (CFX) Stock Now
The U.S. equity market, as well as the global economy, has been jittery over the rising trade tensions between the United States and other foreign nations, especially China, over the past few months. The Trump administration’s decision to bring in another $200 billion worth of Chinese imports under the tariff bracket, as announced yesterday, has heightened the chances of a possible escalation in the international trade dispute.
Amid all the worries, certain tailwinds, currently prevailing, can help to strengthen investors’ confidence in the U.S. economy. We believe the advancing industrial sector of the country — as evident from growing industrial production — can be encouraging. It’s worth noting here that the U.S. industrial production grew roughly 4.9% year over year in August 2018, way ahead of 2.8% increase recorded in January.
Moreover, a healthy job market, strengthening housing markets, government’s focus on infrastructural development, favorable changes in tax policies implemented in December last year and others will be beneficial.
Currently, the U.S. economy offers various investment-friendly options. Industrial Products, one of the 16 Zacks sectors, can be worth investing in. The sector currently occupies the fourth position in the Zacks sector list. Its performance in the past year has been impressive, as evident from 5.8% return yielded during the period.
For 2018, the sector's earnings are predicted to increase 24.2% year over year while revenues are projected to grow 9.6%. There are many prevailing tailwinds that underpin the sector’s solid growth prospects, of which few are discussed below:
Of many investment-worthy stocks within the sector, we believe that adding Colfax Corporation to the portfolio will be a smart choice. The stock, with a market capitalization of approximately $4.2 billion, currently sports a Zacks Rank #1 (Strong Buy). In the past three months, the company’s shares have yielded 17.4% return, outperforming 11% growth recorded by the industry.
Let's delve deeper and discuss why Colfax is a suitable investment option.
Bottom-Line Performance & Projections: Colfax’s financial performance has remained better than expected in three out of the last four quarters. Average earnings surprise was a positive 7.91%. This average includes the impact of 15.09% earnings beat recorded in the second quarter of 2018. On a year-over-year basis, the company's bottom line in the second quarter increased 35.6% on the back of sales growth and lower tax rates.
For 2018, the company anticipates gaining from its strengthening Fabrication Technology, and Air & Gas Handling business segments. Further, lower tax rates — estimated at 20-22% versus 23-24% expected earlier — would be beneficial. It raised earnings projection for the year to $2.15-$2.30 per share against previous estimates of $2.05-$2.20. It’s worth noting here that the mid-point of the revised guidance represents year-over-year growth of 24%.
In the past 60 days, driven by solid performance and outlook, earnings estimates on Colfax for both 2018 and 2019 have been increased by 10 brokerage firms. Currently, the Zack Consensus Estimate for earnings is pegged at $2.25 for 2018 and $2.50 for 2019, reflecting growth of 5.6% and 7.3% from the respective 60-day-ago tallies. Furthermore, the company’s earnings in the next five years are projected to grow 12.8%.
Colfax Corporation Price and Consensus
Colfax Corporation Price and Consensus | Colfax Corporation Quote
Solid Top Line: In the second quarter of 2018, Colfax’s top-line growth of 9.1% compared with the year-ago comparable quarter was driven by forex tailwinds and gains from acquired assets, partially offset by decline in existing businesses. For the Air and Gas Handling segment, sales grew 3.2% year over year while that for Fabrication Technology segment increased 13.4%.
The Fabrication Technology segment is likely to gain from impressive market conditions and favorable pricing. Its organic sales are projected to improve 5-8% in 2018. Moreover, profitability for Air & Gas Handling segment will improve on the back of order growth, and efficient cost structure.
In addition to these, Colfax is constantly engaged in improving business in emerging markets, including China, India, Brazil and others. Such advancement will help in boosting top-line growth prospects. Over the long run (three to five years), the company anticipates organic sales growth of 1-2% above GDP.
The Zacks Consensus Estimate for revenues on the stock is currently pegged at $3.7 billion for 2018 and $3.8 billion for 2019, reflecting year-over-year growth of 3.9% and 4.1%, respectively.
Reward to Shareholders: Colfax believes in rewarding shareholders handsomely, especially through share buybacks. In the second quarter of 2018, it used roughly $144 million in cash for repurchasing shares. It's worth mentioning here that the company repurchased 6.4 million shares since May 2018, completing $200-million share buyback program.
Inorganic Activities: Another interesting aspect about Colfax is its acquisitive nature.
Over time, the company has solidified its product portfolio and leveraged business opportunities through the addition of assets. Here, buyouts of TBi, HKS and Siemens AG's Siemens Turbomachinery Equipment GmbH business in 2017 are worth mentioning. Further, its Fabrication Technology segment gained new strength through the addition of Sandvik Materials Technology's welding-wire operations in the first quarter of 2018.
Additionally, during the second quarter of 2018, the company decided to acquire Europe-based Gas Control Equipment. This buyout will be integrated into the company’s Fabrication Technology segment and will likely generate annualized revenues in excess of $100 million in the future.
In the second quarter of 2018, acquired assets contributed 8.3% to sales growth. Moreover, buyouts added 12.1% to Air and Gas Handling segment, and 5.5% to Fabrication Technology segment.
Other Stocks to Consider
Three other top-ranked stocks in the industry are Altra Industrial Motion Corp. , Barnes Group Inc. (B - Free Report) and IDEX Corporation (IEX - Free Report) . While Altra Industrial sports a Zacks Rank #1, both Barnes and IDEX carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these stocks have improved for the current and the next year. Further, average positive earnings surprise for the last four quarters was 4.01% for Altra Industrial, 6.88% for Barnes Group and 4.37% for IDEX.
5 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
Click to see them right now >>