Zacks Investment Research downgraded Luxfer Holdings PLC (LXFR) to a Zacks Rank #5 (Strong sell) on Aug 16, 2013.
Why the Downgrade?
Shares of Luxfer Holdings have dropped 0.5% since the company reported its second quarter of 2013 results on Aug 12. Adjusted net income plummeted 8.3% year over year to $10.0 million. Diluted earnings per ADS came in at 36 cents, behind the Zacks Consensus Estimate of 40 cents.
Revenue for Luxfer Holdings decreased 2.1% year over year due primarily to weak results from the Elektron Division and $1.0 million negative impact from foreign currency translation. Gas Cylinders Division’s revenue grew 13.7% year over year while Elektron Division posted 15.3% year-over-year decline.
Talking of expenses and margins, cost of sales in the quarter represented 75.2% of total revenue, a slight increase from 74.9% reported in the year-ago quarter. Operating margin in the quarter was 12.3%, down 190 basis points, year over year.
For fiscal 2013, management of Luxfer Holdings anticipates trading profit to be $60.5 million-$63.5 million in 2013, down $5.0 million-$8.0 million from 2012 results. Weak results are anticipated from European automotive and the U.S. defense markets in the quarters to come.
In the last 7 days, the Zacks Consensus Estimate for Luxfer Holdings has gone down by 10.1% to $1.51 for 2013 and has declined 9.2% to $1.78 for 2014. Also, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of -6.6% and -2.8% for 2013 and 2014, respectively.
Other Stocks to Consider
Luxfer Holdings currently has a market capitalization of $460 million and operates in the diversified machinery industry. Other stocks to watch out for in the industry are Gorman-Rupp Co. (GRC) and Graham Corp. (GHM), each with a Zacks Rank #1 (Strong Buy) while Barnes Group Inc. (B) carries a Zacks Rank #2 (Buy).
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