Zacks Investment Research downgraded Global Power Equipment Group Inc. GLPW to a Zacks Rank #5 (Strong Sell) on Jun 25, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Investors are finding it hard to regain their confidence in Global Power Equipment Group, after the company reported lackluster first-quarter results on May 2, 2014. Since then, the stock price has lost nearly 5.5%, with little scope of recovery expected thereafter.
Global Power Equipment's bottom-line result was at a break-even level, well below the Zacks Consensus Estimate of 11 cents per share. Revenues were down 10.1% year over year due to weak Energy Services and Nuclear Services revenues. Interest expense soared 380.2% as the company's debt levels expanded.
Lower-than-expected results have triggered downward revisions in earnings estimates for Global Power Equipment. Over the last 60 days, the Zacks Consensus Estimate has decreased 29.6% to 57 cents per share for 2014 and 4.5% to $1.05 for 2015. The estimate for 2014 represents a year-over-year decline of 17.4%.
For second-quarter 2014, the Zacks Consensus Estimate has been lowered by 20% to 12 cents per share, down 7.7% year over year.
Other Stocks to Consider
Global Power Equipment Group has a $285 million market capitalization. Some better-ranked stocks in the same industry include Gorman-Rupp Co. GRC, Nordson Corporation NDSN and CommScope Holding Company, Inc. COMM. All these companies hold a Zacks Rank #2 (Buy).
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