Still a lot of headwinds at Colfax!
Colfax Corp. (NYSE: CFX) reported Q2 2016 results yesterday and proved that the economic sectors they are working in are still in very difficult conditions.
Even as they managed to beat analyst expectations they reported lower net sales and lower net earnings than one year ago:
Net sales were $957.2 million, a decrease of 6.7% from the prior year.
Net income was $39.8 million, or $0.32 per dilutive share, compared to $53.1 million, or $0.42 per share, for the second quarter of 2015.
Even more worrisome is that second quarter gas- and fluid-handling orders decreased by 11.3% to $445.7 million compared to orders of $502.3 million for the second quarter of 2015, an organic order decline of 15.5%.
So what did Colfax do in order to address these market problems?
“In response, we have initiated additional, structural cost reduction actions to improve profitability even if the market does not return to growth in near term,” CEO Matthew Trerotola pointed out in the press release.
Shareholders can learn 2 things from this comment:
– Colfax visibility when market conditions will improve is very low.
– Colfax does what it already does for a couple of quarters: lowering costs and restructuring. This will indeed be a very lean company when finally market conditions will improve.
But until this happens probably a lot more patience is needed.
Colfax stock trades at a p/e ratio of around 19, this is not exactly cheap as the market continues to have faith in this high quality company.
Perhaps news from the acquisition front could brighten the picture but until now nothing has been announced.
Colfax share is a buy for longterm oriented shareholders who can hold out at least until 2017!