We believe that Luxfer Holdings PLC (LXFR - Free Report) is a solid choice for investors who are seeking exposure in the machinery industry.
The stock, with roughly $488 million market capitalization, was upgraded to a Zacks Rank #1 (Strong Buy) on Jun 9. Its investment appeal is further accentuated by a VGM Score of A.
Luxfer Holdings delivered better-than-expected results in two of the last four quarters while surpassing estimates in one and recording in-line results in one. Average earnings surprise was positive 4.61%. Notably, the company’s shares have rallied 28% in the past three months, outperforming 5.9% decline of the industry.
Why the Upgrade?
We are providing a snapshot of how Luxfer Holdings fared in the first quarter of 2018. Its earnings of 38 cents per share surpassed the Zacks Consensus Estimate by 18.8%. Net sales went up 15.8% year over year, on the back of healthy performance of Gas Cylinders and Elektron segments.
In the quarters ahead, Luxfer Holdings anticipates growth in sales of SCBA and aluminum cylinders to be beneficial for its Gas Cylinders segment while increasing sales of magnesium-based products are likely to drive results for the Elektron segment. Lower tax rates will be a boon as well. For 2018, the company has increased its earnings per share guidance to $1.20-$1.30.
In addition to these, Luxfer Holdings’ transformational initiatives — including simplification, high-performance culture and talent, productivity acceleration, growth recovery and portfolio optimization — will enable the company to deliver double-digit earnings growth in the years ahead. The phase 1 of the transformational initiatives started in 2017 and is due to end in 2018 while phase 2 will be carried out during 2017-2020 and phase 3 from 2018 onward. From the productivity acceleration initiative, the company anticipates realizing $20 million in annualized savings by 2021.
Moreover, Luxfer Holdings’ addressable end-markets, including highly engineered advanced materials and high-performance gas cylinders, are estimated to be worth $10 billion. Moreover, from 2018 to 2023, the advanced material market is anticipated to grow 3-7% (CAGR) and gas cylinder market to expand 1-2% (CAGR).
In the last 30 days, the company’s earnings estimates for 2018 and 2019 have been revised positively. The Zacks Consensus Estimate stands at $1.29 for 2018 and $1.53 for 2019, reflecting an increase of 10.3% and 13.3% from their respective 30-day-ago tallies. Estimates represent year-over-year growth of 26.5% for 2018 and 18.6% for 2019.
Luxfer Holdings PLC Price and Consensus