Archive for February, 2012

Colfax share price – expensive or not ?

February 16th, 2012 Comments off

Colfax share price went down after the release of FY 2011 results but suprisingly only for one single day. Then a lot of buying interest pushed the stock price up to $ 35 these days.

So is Colfax stock cheap or expensive? …difficult to answer!

The Charter acquisition is the biggest step ahead in the history of Colfax:

Revenue will jump from $ 693 mil in FY 2011 to about $ 4 bil in FY 2012!

The company’s guidance for the coming year is EPS of $ 0.41 – 0.57 or EPS of $ 1.45 – 1.65 adjusted by most expenses, also the acquistion related ones.

If we assume the company only reaches the lower end of adjusted EPS guidance the stock trades at a p/e of 24 which is not exactly cheap.

The one and only question certainly is: will they be able to restructure Charter successfully in 2012 and beyond? Will they be able to implement the Colfax Business System to their biggest acquistion so far?

They already proved several times with smaller acquistions that they are perfectly capable of doing that, but again, Charter is the biggest nut to crack.

So at this point you need some help to decide?

Insiders are buying the stock in these days. And among them are the Rales brothers, founders of Colfax and of Danaher group, the company from which Colfax got their „Colfax Business System”!

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Colfax got a lot bigger!

February 15th, 2012 Comments off

Colfax (NYSE: CFX) the „fluid handling company” got a lot bigger!
Colfax on January 13th 2012 completed the acquisition of Charter plc.

To remember: This is the biggest acqisition for the still relatively young Colfax Corp. The price for this acquisition was $2.4 bil and was financed as a debt/equity deal.

This acquisition ads 2 totally new business lines to Colfax:
– ESAB cutting and welding and
– Howden which furnishes precision air and gas handling equipment

So no wonder that this topic dominated the FY 2011 Earnings Conference Call. The replay you can find on the company’s Investor Relations website.

Colfax already charged acquisition costs of more than $25 mil in Q4 2011 and therefore swung to a loss.

But the existing business performed rather well in this difficult economic environment:
operating margin was up 1,6 % in FY 2011 reflecting productivity improvements. Bookings were up 28% or 12% organically.

Don’t forget that Colfax thanks to its „Colfax Business System” is in a sort of permanent resstructuring mode.

In the 2 acquired new business lines they are already at work cutting costs. They want to cut them by at least $ 100 mil over the next 3 – 5 years in order to reach a double digit ROIC within this time frame and an improvement of the operating margin every year!

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Colfax released its FY and Q4 2011 Earnings

February 9th, 2012 Comments off

Colfax Corporation (NYSE: CFX) the industrial conglomerate this blog follows regularly released its FY and Q4 2011 earnings this week.

You’ll find it here at their investor relation site!

The results were heavily influenced by the Charter International plc acquisition and therefore missed analysts expectations.

The stock price declined immediately after the results came out but then recovered.

We will have a look at the numbers!

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Markel Corporation’s 2011 Earnings Report

February 3rd, 2012 Comments off

Markel Corporation (NYSE: MKL), one of the 2 companies this blog follows closely reported FY and Q4 2011 Earnings:

The press release can be found on Markel’s Investor Information Site.

A transcript of their Earnings Conference Call can be found on „Seeking Alpha”.

Book value per common share outstanding, the most important metric to value an insurance company increased 8% to $ 352.10 at december 31, 2011 from $ 326.36 at december 31, 2010.

The combined ratio of the insurance business unfortunately rose from 97% on year ago to 102% in 2011 mainly due to natural catastrophies like the Thai floods and hurricane Irene.

Revenues from Markel Ventures, that’s where they invest money in privatly held companies in the Berkshire Hathaway style, jumped from $ 166 millions to $ 317 millions in 2011 mainly due to one big acquisition.

Markel’s investments in the fixed income sector are very cautious as they are traditionally „balance sheet oriented”.

They forego current investment income as they maintain shorter than usual durations in the bond portfolio.

By doing this they avoid heavy losses on their portfolio once this zero interest environment comes to an end.

And that will exactly be the moment when Markel’s stock will return to market’s favor. So be prepared!

Markel’s stock at a price of $ 405 trades at just 1.2 book value /share: …rather cheep isn’t it … why not pick up some shares?

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