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Barnes (B) Rides on Aerospace Segment Strength Amid Cost Woes
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Barnes Group Inc. (B - Free Report) is poised to gain from its well-diversified portfolio. The strong performance of Aerospace segment, driven by volume increases within both the original equipment manufacturing (OEM) and Aftermarket businesses, is aiding the company. Investments in product development, new technologies and manufacturing processes are anticipated to be beneficial over the long term.
Barnes is steadily strengthening its business through acquisitions. In August 2023, the company completed the buyout of MB Aerospace, expanding its aerospace business’ global OEM offerings and aftermarket repair capabilities. This also enhanced Barnes’ ability to deliver value-add solutions across the aero-engine value chain, broadened customer relationships and widened exposure to the defense industry. MB Aerospace is part of Barnes’ Aerospace segment.
B continues to increase shareholders’ value through dividend payments and share buybacks. In the first nine months of 2023, Barnes rewarded its shareholders with dividends of $24.3 million. In 2022, the company paid out dividends worth $32.4 million to its shareholders.
However, B is facing productivity challenges in some of its facilities across North America and Asia due to a significant increase in new employees.
The company’s motion control solutions business within the Industrial segment is facing challenges due to the ongoing United Auto Workers strike. Also, shipment delays and lagging orders are worrisome for the segment. Higher-than-expected transformation costs, a slowdown in the U.S. economy, geopolitical instability and labor productivity challenges may impact Barnes’ performance in the near term.
Escalating costs and expenses have been a concern for the company over time. B’s cost of sales in the first nine months of 2023 increased 12.1% year over year. High raw material costs are pushing up the cost of sales. Selling and administrative expenses also rose 24.3% in the same period. Escalating costs, if unchecked, can be detrimental to Barnes’ margins and profitability.
In the past year, shares of this current Zacks Rank #3 (Hold) company have lost 26.2% against the industry’s 16.5% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the same industry have been discussed below.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady. The stock has risen 20.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings remained unchanged in the past 60 days. Shares of Applied Industrial have jumped 44.6% in the past year.
Crane Company (CR - Free Report) currently carries a Zacks Rank #2. The company delivered a trailing four-quarter average earnings surprise of 29.8%.
In the past 60 days, the Zacks Consensus Estimate for Crane’s 2023 earnings has remained steady. The stock has risen 48% in the past year.
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Barnes (B) Rides on Aerospace Segment Strength Amid Cost Woes
Barnes Group Inc. (B - Free Report) is poised to gain from its well-diversified portfolio. The strong performance of Aerospace segment, driven by volume increases within both the original equipment manufacturing (OEM) and Aftermarket businesses, is aiding the company. Investments in product development, new technologies and manufacturing processes are anticipated to be beneficial over the long term.
Barnes is steadily strengthening its business through acquisitions. In August 2023, the company completed the buyout of MB Aerospace, expanding its aerospace business’ global OEM offerings and aftermarket repair capabilities. This also enhanced Barnes’ ability to deliver value-add solutions across the aero-engine value chain, broadened customer relationships and widened exposure to the defense industry. MB Aerospace is part of Barnes’ Aerospace segment.
B continues to increase shareholders’ value through dividend payments and share buybacks. In the first nine months of 2023, Barnes rewarded its shareholders with dividends of $24.3 million. In 2022, the company paid out dividends worth $32.4 million to its shareholders.
However, B is facing productivity challenges in some of its facilities across North America and Asia due to a significant increase in new employees.
The company’s motion control solutions business within the Industrial segment is facing challenges due to the ongoing United Auto Workers strike. Also, shipment delays and lagging orders are worrisome for the segment. Higher-than-expected transformation costs, a slowdown in the U.S. economy, geopolitical instability and labor productivity challenges may impact Barnes’ performance in the near term.
Escalating costs and expenses have been a concern for the company over time. B’s cost of sales in the first nine months of 2023 increased 12.1% year over year. High raw material costs are pushing up the cost of sales. Selling and administrative expenses also rose 24.3% in the same period. Escalating costs, if unchecked, can be detrimental to Barnes’ margins and profitability.
In the past year, shares of this current Zacks Rank #3 (Hold) company have lost 26.2% against the industry’s 16.5% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the same industry have been discussed below.
Flowserve Corporation (FLS - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady. The stock has risen 20.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings remained unchanged in the past 60 days. Shares of Applied Industrial have jumped 44.6% in the past year.
Crane Company (CR - Free Report) currently carries a Zacks Rank #2. The company delivered a trailing four-quarter average earnings surprise of 29.8%.
In the past 60 days, the Zacks Consensus Estimate for Crane’s 2023 earnings has remained steady. The stock has risen 48% in the past year.