Zacks Investment Research downgraded Luxfer Holdings PLC LXFR to a Zacks Rank #5 (Strong Sell) on Oct 13, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.
Why the Downgrade?
Market sentiments have been weak for Luxfer Holdings since the company updated its guidance for third-quarter 2016 on Oct 10. Since then, the company’s share price has fallen roughly 14.4%.
Luxfer Holdings expects weak results due to soft demand in many end-markets served, especially the defense industry. Lower defense spending as well as adverse impact from the outage at one the defense customers’ facility has impacted demand for magnesium-based products. To partially mitigate the negatives, the company has closed its magnesium powder facility temporarily. In addition, the company is expecting weak demand for its sand-casting alloys in the quarters ahead.
For the third quarter, Luxfer Holdings predicts adjusted earnings to be 12 cents per share, lower than both the first and second-quarter results. Bleak prospects have made investors doubtful regarding Luxfer Holdings’ performance in the quarters ahead.
Over the last seven days, the Zacks Consensus Estimate for Luxfer Holdings has decreased 16.7% to $1.10 per share for 2017, while remaining stable at $1.14 per share for 2016. Also, the estimate for the third quarter has decreased 32% to 17 cents per share.
Stocks to Consider
Luxfer Holdings PLC currently has a market capitalization of $260 million. Better-ranked stocks in the machinery industry include Nordson Corporation NDSN, Barnes Group B and Altra Industrial Motion Corp AIMC. While Nordson Corporation sports a Zacks Rank #1 (Strong Buy), both Barnes Group and Altra Industrial Motion carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nordson Corporation’s financial performance has been impressive, with an average positive earnings surprise of 9.13% for the last four quarters. Also, earnings estimates for fiscal 2016 and fiscal 2017 have been revised upward over the last 60 days.
Barnes Group reported better-than-expected results in the last quarter, with a positive earnings surprise of 6.78%. Also, bottom-line expectations for 2017 have improved over the past 60 days.
Altra Industrial Motion has a solid earnings surprise history, with an average of 9.20% for the last four quarters.
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