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Why it is Worth Holdings on to Barnes (B) Stock for Now
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We have issued an updated research report on Barnes Group Inc. (B - Free Report) on Dec 1.
The company, based in Bristol, CT, presently has a $2.5-billion market capitalization. It makes and distributes products, including robotic grippers, fine-blanked solutions, robotic grippers and others. The company presently carries a Zacks Rank #3 (Hold).
It belongs to the Zacks Manufacturing - General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the top 35% (with a rank of 89) of more than 250 Zacks industries.
In the past three months, Barnes’ shares have gained 18.2% as compared with the industry’s growth of 10%. Also, the sector has expanded 12.3% and the S&P 500 has risen 1% during the same timeframe.
Few factors that are currently influencing Barnes are briefly discussed below.
Diversification and Other Tailwinds: The company has exposure in multiple end markets, including packaging, manufacturing, aerospace, automation, transportation and healthcare. This equips it to offset weakness in one or more markets with strength in others. Solid solutions based on robotic technologies have strengthened the company’s position in the healthcare, food and beverage, automotive, and packaging markets.
In addition, the company’s solid product portfolio, focus on innovation, operational and commercial excellence, and strength in its Gimatic business will likely be advantageous.
Shareholder Reward: The company uses part of its capital for rewarding shareholders well. It used $24.3 million for paying dividends and $15.6 million for repurchasing shares in the first three quarters of 2020. To be precise, the company paid out a quarterly dividend of 16 cents per share in the third quarter, while made no share buybacks. Exiting the quarter, it was left with the authorization to buy back 3.7 million shares.
Debt Reduction: The company is working diligently to lower its debts. Exiting third-quarter 2020, its long-term debts were $701.4 million, suggesting a sequential decline of 1.4%. Notably, it repaid long-term borrowings of $194.3 million in the first three quarters of 2020.
Also, the company’s times interest earned, and total debt to total capital were at 8.8X and 35%, respectively. Notably, these metrics compare favorably with the industry’s debts of $3,169 million, times interest earned of 7.4X, and total debt to total capital of 47.7%.
Pandemic Woes and Management’s Expectation: The coronavirus-led challenges severely impacted the company’s business in third-quarter 2020, with core sales declining 26% year over year. Weakness in automotive and aerospace markets adversely influenced results and might continue doing so in the quarters ahead.
For fourth-quarter 2020, the company is wary about the lingering impacts of the pandemic on its operations. It expects organic sales to decline 20% year over year and adjusted earnings to be 27-35 cents per share, reflecting a 64% fall from the year-ago quarter.
Earnings Estimate Trend: Barnes’ earnings estimates have been decreased in the past 60 days, reflecting bearish sentiments for the stock. Notably, the Zacks Consensus Estimate for its earnings is pegged at 32 cents and 39 cents for fourth-quarter 2020 and first-quarter 2021, reflecting declines of 8.6% and 23.5% from the respective figures mentioned two months ago.
Notably, there were two downward revisions in estimates and one upward for the fourth quarter of 2020. Further, just one downward revision was recorded for the first quarter of 2021.
International Woes: Barnes carries out its operations in multiple countries, including China, the United States, Italy, Germany, Switzerland and others. International diversification has exposed the company to unfavorable movements in foreign currencies, geopolitical issues, local competitive pressure and macroeconomic challenges.
Stocks to Consider
Some better-ranked companies in the industry are Altra Industrial Motion Corp. , Dover Corporation (DOV - Free Report) and Graco Inc. (GGG - Free Report) . While Altra Industrial currently sports a Zacks Rank #1 (Strong Buy), both Dover and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for the current year have been unchanged for these companies. Further, earnings surprise for the last reported quarter was 77.55% for Altra Industrial, 22.14% for Dover and 40.48% for Graco.
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Why it is Worth Holdings on to Barnes (B) Stock for Now
We have issued an updated research report on Barnes Group Inc. (B - Free Report) on Dec 1.
The company, based in Bristol, CT, presently has a $2.5-billion market capitalization. It makes and distributes products, including robotic grippers, fine-blanked solutions, robotic grippers and others. The company presently carries a Zacks Rank #3 (Hold).
It belongs to the Zacks Manufacturing - General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the top 35% (with a rank of 89) of more than 250 Zacks industries.
In the past three months, Barnes’ shares have gained 18.2% as compared with the industry’s growth of 10%. Also, the sector has expanded 12.3% and the S&P 500 has risen 1% during the same timeframe.
Few factors that are currently influencing Barnes are briefly discussed below.
Diversification and Other Tailwinds: The company has exposure in multiple end markets, including packaging, manufacturing, aerospace, automation, transportation and healthcare. This equips it to offset weakness in one or more markets with strength in others. Solid solutions based on robotic technologies have strengthened the company’s position in the healthcare, food and beverage, automotive, and packaging markets.
In addition, the company’s solid product portfolio, focus on innovation, operational and commercial excellence, and strength in its Gimatic business will likely be advantageous.
Shareholder Reward: The company uses part of its capital for rewarding shareholders well. It used $24.3 million for paying dividends and $15.6 million for repurchasing shares in the first three quarters of 2020. To be precise, the company paid out a quarterly dividend of 16 cents per share in the third quarter, while made no share buybacks. Exiting the quarter, it was left with the authorization to buy back 3.7 million shares.
Debt Reduction: The company is working diligently to lower its debts. Exiting third-quarter 2020, its long-term debts were $701.4 million, suggesting a sequential decline of 1.4%. Notably, it repaid long-term borrowings of $194.3 million in the first three quarters of 2020.
Also, the company’s times interest earned, and total debt to total capital were at 8.8X and 35%, respectively. Notably, these metrics compare favorably with the industry’s debts of $3,169 million, times interest earned of 7.4X, and total debt to total capital of 47.7%.
Pandemic Woes and Management’s Expectation: The coronavirus-led challenges severely impacted the company’s business in third-quarter 2020, with core sales declining 26% year over year. Weakness in automotive and aerospace markets adversely influenced results and might continue doing so in the quarters ahead.
For fourth-quarter 2020, the company is wary about the lingering impacts of the pandemic on its operations. It expects organic sales to decline 20% year over year and adjusted earnings to be 27-35 cents per share, reflecting a 64% fall from the year-ago quarter.
Earnings Estimate Trend: Barnes’ earnings estimates have been decreased in the past 60 days, reflecting bearish sentiments for the stock. Notably, the Zacks Consensus Estimate for its earnings is pegged at 32 cents and 39 cents for fourth-quarter 2020 and first-quarter 2021, reflecting declines of 8.6% and 23.5% from the respective figures mentioned two months ago.
Barnes Group, Inc. Price and Consensus
Barnes Group, Inc. price-consensus-chart | Barnes Group, Inc. Quote
Notably, there were two downward revisions in estimates and one upward for the fourth quarter of 2020. Further, just one downward revision was recorded for the first quarter of 2021.
International Woes: Barnes carries out its operations in multiple countries, including China, the United States, Italy, Germany, Switzerland and others. International diversification has exposed the company to unfavorable movements in foreign currencies, geopolitical issues, local competitive pressure and macroeconomic challenges.
Stocks to Consider
Some better-ranked companies in the industry are Altra Industrial Motion Corp. , Dover Corporation (DOV - Free Report) and Graco Inc. (GGG - Free Report) . While Altra Industrial currently sports a Zacks Rank #1 (Strong Buy), both Dover and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for the current year have been unchanged for these companies. Further, earnings surprise for the last reported quarter was 77.55% for Altra Industrial, 22.14% for Dover and 40.48% for Graco.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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