Archive for May, 2019

Colfax sells its Air and Gas handling business

May 16th, 2019 Comments off

So now it is official:

Colfax Corp. (NYSE: CFX) sells its Air and Gas handling business to KPS Capital Partners for $ 1.8 billion!

Today’s stock market reacts favorably: Colfax share price is up 4.5% at the moment of this writing. This move will bring down debt and improve the balance sheet of Colfax Corp. !

Colfax Corp. continues the transformation process of the company

May 10th, 2019 Comments off

Colfax Corp. (NYSE: CFX) released Q1 2019 results.

After the acquisition of DJO Global completed in February 2019 Colfax is now a company which operates in 3 segments:

Orthopedics, Fabrication Technology and Air & Gas Handling

Adjusted earnings were $ 0.53 , 10.4% higher than in the year ago quarter.

The major contribution to the 14.4% revenue growth this quarter came from the acquired orthopedics business growing 19.2% in comparison to the 1.6% growth in existing businesses.

CEO Trerotola pointed out on the conference call that „DJO launched six new products in the first quarter that will contribute to an improving growth trajectory later this year and in 2020“.

But he also pointed out that Colfax „made significant improvements in the Air & Gas Handling business that are now leading through with consistent growth in orders and margins and the business is expected to return to top-line growth in the second half.“

As Colfax intends to sell this business this certainly helps to get a better price.

The balance sheet quality deteriorated. Long-term debt balance increased substantially to $4,037.1 million from $1,192.4 million in the previous quarter as Colfax already bought DJO Global but did not sell yet the Air&Gas Handling business.

But this can be expected within the next several months and the balance sheet will improve.

This means for investors that the transformation process of Colfax will most likely continue for a couple of quarters more.

Will management be able to transform DJO Global into a growth story?

Will fabrication technology continue to be a slow grower?

For 2019 Colfax anticipates adjusted earnings of $ 2.55-$2.65 .

At today’s price of $26.77 this translates into a p/e ratio of just 10 !

This looks cheap but Colfax still isn’t the growth story it once has been.

Even if this 1st quarter has been solid, investors should wait until more signs of improvement emerge. Until then Colfax remains a hold!

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Markel is off to a very good start in 2019

May 3rd, 2019 Comments off

Markel (NYSE:MKL) the speciality insurer released very good results for Q1 2019.

This is encouraging after the hefty swings of the share price from an all time high of $ 1’217.82 in August 2018 down to $ 957 in January 2019 and now up again to $ 1061,05

Since the beginning of 2018 incertainty came from the ongoing governmental inquiries into the loss reserves of the „CatCo business“ which today seem to be behind them.

Book value/share rose from $ 671.05 in the prior year quarter to $ 706.98 , an increase of 5.4% and the combined ratio was 95% compared to 90% in the 1st quarter 2018.

Operating revenue growth of 56.9% yoy from $1.575 billion to $ 2.472 billion is certainly an impressing number but can largely be explained by accounting rules:

Markel every quarter has to adjust the fair value of their equity securities to market prices. As the equity market recovered in Q1 2019 $611.5 million increase in operating revenue can be explained by this increase.

At Markel’s investment operations net investment income increased 5.7% year over year, to $114.2 million.

At Markel Ventures operating revenue grew 16.1% to $455 billion and operating income grew 25.8% to $29.9 million

Markel is cautiously optimistic about the remainder of this year!

At a price/book value per share ratio of 1.5 Markel’stock remains a buy!

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