Colfax Reaches a New 52-Week High - Analyst Blog

Shares of Colfax Corporation CFX touched a new 52-week high of $74.78 during its trading session on May 8. The primary driver was the company's stellar performance in first-quarter 2014. The new 52-week high improved upon the last 52-week high of $74.09 hit on May 6.

Colfax closed the trading on May 8 at $73.90, reflecting a solid year-to-date return of 60.7%. The trading volume for the session was 0.49 million. Earnings estimate revisions for 2014 and 2015 and an expected earnings growth rate of 19.5% for the next five years indicate further upward potential for this manufacturing and engineering company.

Growth Drivers

Colfax's impressive first-quarter 2014 results not only triggered positive revisions in earnings per share estimates, but also drove the share price up by 2.1% since Apr 24, 2014. Earnings were 43 cents per share, surpassing the year-ago figure by 65.4%. However, the bottom-line result lagged the Zacks Consensus Estimate by a penny.

Revenues grew 11.3% on the back of 5.6% organic growth and 9.0% gain from acquisitions, offset by a 3.3% negative impact from currency translation. Orders at $583 million were up 16.2% while backlog grew 10.7%.

For 2014, Colfax anticipates the Victor acquisition, completed in April, to boost its results. Accordingly, the company has increased its top-line guidance to a $4.85−$4.99 billion range from the previous projection of $4.5−$4.625 billion. Earnings per share are expected to be within $2.45−$2.70, slightly up from the prior expectation of $2.40−$2.65.

Impressive results, a robust outlook as well as a positive average earnings surprise of 3.1% have made us optimistic about Colfax's performance in the coming quarters. The company has an Earnings ESP of +1.54% for second-quarter 2014 and +0.39% for full-year 2014.

Estimate Revisions Show Potency

In the last 30 days, the Zacks Consensus Estimate for Colfax has inched up by 0.4% to $2.59 for 2014 and by 2.6% for 2015. The consensus estimate also reflects year-over-year growth of 26.9% for 2014 and 23.8% for 2015.

Colfax presently has a market capitalization of $9.13 billion and carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Gorman-Rupp Co. GRC, Illinois Tool Works Inc. ITW and Nordson Corp. NDSN. While Gorman-Rupp carries a Zacks Rank #1 (Strong Buy), both Illinois Tool Works and Nordson hold a Zacks Rank #2 (Buy).