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Colfax (CFX) Shares Gain 41% in 3 Months: What's Driving It?

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Shares of Colfax Corporation have gained notably in the past three months. Growth opportunities anticipated for the second half of 2020, synergistic gains from acquired assets and cost-saving measures seem to have boosted sentiments for the stock.

The Fulton, MD-based company belongs to the Zacks Manufacturing - General Industrial industry. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, the company’s shares have gained 40.5% compared with the industry’s growth of 25.1%. Notably, the S&P 500 has risen 18.2% and the sector has grown 27.6% during the same period.





 

Factors Influencing the Stock

In the past three months, Colfax has reported results for first-quarter 2020, with an earnings beat of 2.7%. Also, results improved 2.7% on a year-over-year basis despite a 4.3% decline in revenues. The pandemic-related concerns made the company suspend its projections for 2020.

In addition, the overall revival in the broader market and Colfax’s expectation of improvement in product demand in the second half of 2020 might have supported the price improvement. Also, its cost-saving measures are expected to help it tide over the pandemic-related financial difficulties. As noted earlier, cost-savings in excess of $100 million might have benefited the company in the second quarter of 2020.

In addition, synergistic gains from acquired assets, solid product offerings and innovation efforts are other tailwinds for Colfax. In February 2019, the company acquired DJO Global. In first-quarter 2020, Colfax’s sales from continuing operations increased 19.4% year over year, including benefits from the DJO Global buyout. Notably, pro forma sales, excluding the buyout impact, declined 4.3% year over year.

Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.21 for 2020 and $1.88 for 2021, marking no change and increase of 0.5% from the respective 30-day-ago figures.

Also, earnings estimates for the second quarter have improved from 3 cents per share to 5 cents in the past 30 days. Such an upward revision in earnings estimates is reflective of improving operating conditions for the company.

Colfax’s Performance Versus Three Peers

The company outperformed three peers — including Kennametal Inc. (KMT - Free Report) , Lincoln Electric Holdings, Inc. (LECO - Free Report) and Graco Inc. (GGG - Free Report) — in the past three months. During the period, Kennametal, Lincoln Electric and Graco’s shares have gained 21.7%, 23% and 17.5%, respectively.

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