Stock to Avoid: Hudson Technologies - Analyst Blog

Zacks Investment Research downgraded Hudson Technologies Inc. HDSN to a Zacks Rank #5 (Strong Sell) on Apr 12, 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?

Hudson Technologies' fourth-quarter 2013 results failed to impress its shareholders as evidenced by a nearly 1% fall in share price since Feb 26. Year to date, the company has yielded a negative return of 23.9%. A snapshot of the quarter's results and outlook are provided below:

The company reported loss per share of 6 cents as against earnings of 11 cents per share reported in the year-ago quarter. However, the result was better than the Zacks Consensus Estimate of a loss of 7 cents a share.

Hudson Technologies' revenues in the quarter decreased 2.0% year over year to $4.8 million. Impact of higher sales volumes was more than offset by lower services revenues. Gross profit margin in the quarter was at 3.6%, down from 20.0% recorded in the year-ago quarter.

In the last 60 days, the Zacks Consensus Estimate for Hudson Technologies has decreased 57.1% to 6 cents for 2014 and by 13.3% to 26 cents for 2015. These estimates reflect a 53.6% year-over-year decline for 2014 and growth of 307.7% for 2015. Lowered earnings estimates have made us dubious about the company's performance in the quarters ahead.
 
Other Stocks to Consider

Hudson Technologies currently has a market capitalization of $72 million. Other stocks to watch out for in the sector include Illinois Tool Works Inc. ITW, Kadant Inc. KAI and Middleby Corp. MIDD, all of which carry a Zacks Rank #1 (Strong Buy).