Colfax is going forward despite a still sluggish economy!
When Colfax Corp. (NYSE: CFX) released its Q3 2013 Earnings it looked a bit like the previous quarter:
The economy is still sluggish but Colfax is humming along continuing with its M&A activity and applying the Colfax Business System (CBS) tools to improve margins and streamline all internal procedures.
As always Seeking Alpha published the conference call transcript.
The company reported net sales of $1.15 billion, an increase of 6% over the same period last year and overall margins expanded from 10.9% in the second quarter to 11.1% in the third quarter.
Adjusted EPS in Q3 was $0.56 per share. This represents a 70% increase versus the $0.33 per share reported last year.
There were some positive highlights in the quarter:
For the gas and fluid-handling segment, net sales for the third quarter were $511 million, an organic increase of 8%, compared to $465 million in last year’s third quarter.
Order activity accelerated across all end markets except marine during the quarter and bookings were helped by large orders in the power and mining end markets. This is typical for the heavy industry business Colfax is in: large orders can distort quarterly results.
The book-to-bill ratio for Colfax as a whole in the third quarter was 1.04:1, stronger than typical for the third quarter, reflecting the exceptionally strong quarter for gas- and fluid-handling orders.
But again, third quarter sales for fabrication technology were $503 million, down 1.2% organically versus the third quarter of 2012 and as there are no indicators that this trend will change in the fourth quarter Colfax lowers its guidance for revenue and earnings.
But this should not distort your long term view of Colfax!
Just imagine how this strong and efficient company will run forward when the economy starts to improve.
At a share price of $ 56.06 Colfax trades at a p/e ratio of 27 for FY 2013 and 22 for FY 2014.
Not cheap, certainly, but not too expensive either.
If you want to start a new position in Colfax perhaps you should consider „to buy in thirds“ over the next months.