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Actaunt (ATU) Faces Headwind Perils: Time to Sell the Stock?


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On Oct 3, 2016, we issued an updated research report on Actuant Corporation (ATU - Analyst Report) . The stock currently carries a Zacks Rank #5 (Strong Sell), indicating that indicating that the stock will underperform the broader market in the near term

Why Should You Shun Actaunt?  

Dismal energy market conditions have been affecting revenues and margins of several machinery or heavy equipment companies like Actuant. The company’s fiscal fourth-quarter 2016 revenues and margins fell short of their respective year-ago tallies, by 8.2% and 18.9%.

Actuant mentioned that conclusion of some major energy projects, along with customer destocking activities, have hurt its core sales in the quarter. Issues, such as lower sales volumes, weaker production as well as absorption volumes and unfavorable business mix, weighed over the margins during the reported quarter.

The company anticipates generating earnings per share (‘EPS’) within the range of 14-19 cents and revenues within $260–$270 million in first-quarter fiscal 2017, including core sales decline of 14−16%. It projects to generate EPS within the range of $1.00–$1.20 per share and revenues within $1.075–$1.125 billion for fiscal 2017. Core sales are estimated to fall in the range of 2−6% in fiscal 2017.

We even believe that weak global demand, stronger U.S. dollar and extensive industry rivalry might continue to hamper the financial fundamentals of this Zacks Rank #5 stock in the quarters ahead. Over the last 7 days, the Zacks Consensus Estimate for the stock has been revised down for both fiscal 2017 and 2018.

Stocks to Consider

ACCO Brands Corp. (ACCO - Snapshot Report) , Allegion Plc (ALLE - Analyst Report) and Stanley Black & Decker, Inc. (SWK - Analyst Report) are three better-ranked stocks within the industry that warrant a look. All the three stocks currently hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The average earnings surprise over the last four trailing quarters for the three above-mentioned stocks are noted below:

ACCO Brands Corporation: 23.96%

Allegion Plc: 11.58%

Stanley Black & Decker, Inc.: 6.12%

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