Colfax operates in an increasingly difficult environment
Colfax Corp. (NYSE:CFX) the air and gas handling and fabrication technology group released Q3 2017 results.
They missed the revenue estimate and the share price fell as much as 13% .
But Colfax confirmed its outlook of $1.65-$1.75 of adjusted EPS, which includes a $0.25-$0.28 full year contribution from its recently sold fluid handling business.
Reduced power market demand and project delays in oil & gas contributed to lower total orders. Colfax believes that oil & gas is a fundamentally improving market, but at the same time they are expanding Air and Gas restructuring actions „to support the business’ 2018 profit growth objective in a less certain revenue environment“.
This quarter Colfax sold its fluid handling business for $ 860 million in order „to strengthen the balance sheet and support the strategic growth program.“
Investors will watch whether the announced growth will be realized within the next couple of quarters as the environment of the oil and gas market in reality will remain difficult. A secular trend to electric mobility has already begun and will certainly reduce demand for oil products over the next years.
Colfax stock trades at a rather expensive p/e ratio of 23. Therefore Colfax remains a hold!