Zacks Investment Research downgraded Sandvik AB (SDVKY) to a Zacks Rank #5 (Strong sell) on May 23, 2013.
Why the Downgrade?
Sandvik AB reported quite disappointing results for the first quarter 2013 on Apr 23, 2013. Earnings per share, in local currency, fell 42.4% year over year as net profits in the quarter registered a 41% decline.
Revenue, in local currency, was down by 11% year over year. Order intake was weak and plummeted roughly 18% compared with the year-ago quarter.
Talking of costs/margins of Sandvik AB, gross margin in the quarter was down 300 basis points due to weak revenue generation and rise in costs of sales and services as a percentage of revenue. Operating expenses rose by 80 basis points while operating margin decreased by 380 basis points in the quarter.
For the second quarter of 2013, management of Sandvik AB has predicted adverse impacts from foreign currency translation and prices of metals.
After taking all these factors into account, earnings estimate for Sandvik AB came down in the last 30 days. The Zacks Consensus Estimate for 2013 decreased by 20.4% to 90 cents while for 2014, the estimate went down by 14.2% to $1.09.
Other Stocks to Consider
Sandvik AB is a $17.5 billion engineering company working primarily for materials technology, and mining and construction industries. Other stocks to watch out for in the industry are Lincoln Electric Holdings Inc. (LECO), Flow International Corporation (FLOW) and Stanley Black & Decker, Inc. (SWK).
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