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Here's Why it is Worth Investing in Colfax (CFX) Stock Now
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Year 2018 has been troubling for industrial machinery industries. Headwinds emanated from disrupted trade relations between the United States and China due to the imposition of import tariff by the United States, higher freight charges, shortage of skilled workers, inflation and many more. The Zacks Industrial Products sector — currently at the bottom 38% of the Zacks sector list of 16 sectors — declined roughly 25.7% year to date.
Notwithstanding the adverse aspects, there are many stocks that can be considered as good options for investment purposes currently. One such stock is Colfax Corporation . This Fulton, MD-based provider of products and services related to air and gas handling, and fabrication technology market currently carries a Zacks Rank #2 (Buy) and a favorable VGM Score of A.
Colfax belongs to the machinery sub-industry, which has companies that primarily work for general industries. This industry is positioned in the top 31% of more than 250 Zacks industries. We believe that infrastructural developments, innovative investments, lower taxes on account of implementation of the U.S. Tax Cuts and Jobs Act, growing manufacturing activities and strengthening housing market are a few factors that are boons for the industry. In the past month, the company’s stock price has declined 19% versus 11.4% fall recorded by the industry.
Note: Per our research, the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Below we discussed why Colfax is currently a worthy investment option.
Robust Performance & Impressive Bottom-Line Outlook: Colfax has been keeping its earnings streak alive for quite some time now. The positive earnings surprise of 3.85% in the last report quarter was the 12th consecutive quarter of better-than-expected results.
The company is anticipated to fair well in 2018 and 2019 as well. It has an Earnings ESP of +0.12% for 2018 and +2.00% for 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Further, the company’s earnings estimates have been raised by brokerage firms, indicating bright prospects ahead. In the past 30 days, estimates for 2018 have been raised by three firms and lowered by one while estimates for 2019 have been increased by five and lowered by none. Currently, the Zacks Consensus Estimate for earnings pegs $2.26 for 2018 and $2.66 for 2019, reflecting growth of 0.4% and 3.9% from the respective 30-day-ago tallies.
Colfax believes that healthy top-line growth, cost-saving initiatives, pricing actions, increased productivity, restructuring moves and lower taxes will be advantageous in the quarters ahead. It anticipates earnings of $2.20-$2.30 per share versus $2.15-$2.30 mentioned earlier. The new projection reflects year-over-year growth of at least 26%.
Revenues — Segmental Business Strong: Colfax operates through two platforms — Air & Gas Handling, and Fabrication Technology. Air & Gas Handling platform stands to gain from order wins in the mining market, strengthening industrial business, and stability in the oil & gas and power businesses. Orders are anticipated to grow in double digits in the fourth quarter of 2018 while expanding 3-7% year over year in 2019.
On the other hand, new products, automation and benefits from Gas Control Equipment’s buyout will benefit the Fabrication Technology platform. In the fourth quarter of 2018, core sales and benefits from acquired assets will be in a high-single digit. In 2019, the platform’s core sales will grow in a mid-single-digit range.
The Zacks Consensus Estimate for revenues for Colfax is pegged at $3.66 billion for 2018 and $3.81 billion for 2019, reflecting year-over-year growth of 3.7% and 4.1%, respectively.
Acquisitions: Over time, Colfax fortified product portfolio and leveraged business opportunities through the addition of assets. In the third quarter of 2018, the company acquired ACH Equipos Ltda., Advanced Combustion Inc. and Gas Control Equipment. While ACH Equipos and Advanced Combustion were added to the Air & Gas Handling platform, Gas Control Equipment was integrated with the Fabrication Technology platform.
In November 2018, the company decided to acquire DJO Global Inc. for $3.15 billion. This move is in sync with Colfax’s diversification strategy and, when completed (expected in the first quarter of 2019), it will mark its entry into the orthopedic solutions industry. Earnings accretion is predicted in the 12 months of the completion of the buyout.
Debt Profile: Colfax’s long-term debt at the end of the third quarter of 2018 was $1,136 million. The company’s debt profile is better compared with the industry. Its debt/equity of 32.6% is lower than the industry’s 81.6%.
Colfax prefers to maintain its current debt ratings and wishes to lower its debt burden in the months ahead. Net leverage ratio of the mid-3 range is targeted to be achieved in 2019.
In the past 60 days, earnings estimates for all these three stocks improved for the current year. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 23.64% for EnPro Industries and 60.61% for Luxfer.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Here's Why it is Worth Investing in Colfax (CFX) Stock Now
Year 2018 has been troubling for industrial machinery industries. Headwinds emanated from disrupted trade relations between the United States and China due to the imposition of import tariff by the United States, higher freight charges, shortage of skilled workers, inflation and many more. The Zacks Industrial Products sector — currently at the bottom 38% of the Zacks sector list of 16 sectors — declined roughly 25.7% year to date.
Notwithstanding the adverse aspects, there are many stocks that can be considered as good options for investment purposes currently. One such stock is Colfax Corporation . This Fulton, MD-based provider of products and services related to air and gas handling, and fabrication technology market currently carries a Zacks Rank #2 (Buy) and a favorable VGM Score of A.
Colfax belongs to the machinery sub-industry, which has companies that primarily work for general industries. This industry is positioned in the top 31% of more than 250 Zacks industries. We believe that infrastructural developments, innovative investments, lower taxes on account of implementation of the U.S. Tax Cuts and Jobs Act, growing manufacturing activities and strengthening housing market are a few factors that are boons for the industry. In the past month, the company’s stock price has declined 19% versus 11.4% fall recorded by the industry.
Note: Per our research, the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Below we discussed why Colfax is currently a worthy investment option.
Robust Performance & Impressive Bottom-Line Outlook: Colfax has been keeping its earnings streak alive for quite some time now. The positive earnings surprise of 3.85% in the last report quarter was the 12th consecutive quarter of better-than-expected results.
The company is anticipated to fair well in 2018 and 2019 as well. It has an Earnings ESP of +0.12% for 2018 and +2.00% for 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Further, the company’s earnings estimates have been raised by brokerage firms, indicating bright prospects ahead. In the past 30 days, estimates for 2018 have been raised by three firms and lowered by one while estimates for 2019 have been increased by five and lowered by none. Currently, the Zacks Consensus Estimate for earnings pegs $2.26 for 2018 and $2.66 for 2019, reflecting growth of 0.4% and 3.9% from the respective 30-day-ago tallies.
Colfax Corporation Price and Consensus
Colfax Corporation Price and Consensus | Colfax Corporation Quote
Colfax believes that healthy top-line growth, cost-saving initiatives, pricing actions, increased productivity, restructuring moves and lower taxes will be advantageous in the quarters ahead. It anticipates earnings of $2.20-$2.30 per share versus $2.15-$2.30 mentioned earlier. The new projection reflects year-over-year growth of at least 26%.
Revenues — Segmental Business Strong: Colfax operates through two platforms — Air & Gas Handling, and Fabrication Technology. Air & Gas Handling platform stands to gain from order wins in the mining market, strengthening industrial business, and stability in the oil & gas and power businesses. Orders are anticipated to grow in double digits in the fourth quarter of 2018 while expanding 3-7% year over year in 2019.
On the other hand, new products, automation and benefits from Gas Control Equipment’s buyout will benefit the Fabrication Technology platform. In the fourth quarter of 2018, core sales and benefits from acquired assets will be in a high-single digit. In 2019, the platform’s core sales will grow in a mid-single-digit range.
The Zacks Consensus Estimate for revenues for Colfax is pegged at $3.66 billion for 2018 and $3.81 billion for 2019, reflecting year-over-year growth of 3.7% and 4.1%, respectively.
Acquisitions: Over time, Colfax fortified product portfolio and leveraged business opportunities through the addition of assets. In the third quarter of 2018, the company acquired ACH Equipos Ltda., Advanced Combustion Inc. and Gas Control Equipment. While ACH Equipos and Advanced Combustion were added to the Air & Gas Handling platform, Gas Control Equipment was integrated with the Fabrication Technology platform.
In November 2018, the company decided to acquire DJO Global Inc. for $3.15 billion. This move is in sync with Colfax’s diversification strategy and, when completed (expected in the first quarter of 2019), it will mark its entry into the orthopedic solutions industry. Earnings accretion is predicted in the 12 months of the completion of the buyout.
Debt Profile: Colfax’s long-term debt at the end of the third quarter of 2018 was $1,136 million. The company’s debt profile is better compared with the industry. Its debt/equity of 32.6% is lower than the industry’s 81.6%.
Colfax prefers to maintain its current debt ratings and wishes to lower its debt burden in the months ahead. Net leverage ratio of the mid-3 range is targeted to be achieved in 2019.
Other Stocks to Consider
Some other top-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , EnPro Industries, Inc. (NPO - Free Report) and Luxfer Holdings PLC (LXFR - Free Report) . All these stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for all these three stocks improved for the current year. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 23.64% for EnPro Industries and 60.61% for Luxfer.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>