Specialty industrial services provider, Team, Inc. (TISI), recently lowered its earnings guidance for fourth quarter fiscal 2013 ending May 31. Considering the opening stock price on May 20, the day on which the company revised its earnings estimate downwards, shares have fallen around 12.5% to a closing price of $35.00 on May 21.
Apart from providing industrial services, Team Inc. also inspects and assesses piping systems and vessels used in refining, petrochemical, power, pipeline and other heavy industries.
Outlook for Fourth Quarter Fiscal 2013
Team Inc. presently expects fourth quarter earnings between 52 cents and 60 cents per share, down from its earlier guidance of 69 cents to 84 cents. Management believes that lower profit margins would adversely hit the company’s previous earnings guidance. It currently expects gross margins to be 200 bps lower than its previous guidance. Management also expects to report slower growth in revenues due to fewer big turnaround projects.
In addition, management believes that the company would be adversely hit during the quarter due to cost and utilization challenges. It further stated that its results would be poorly affected due to considerable growth in resources, thereby causing an imbalance between cost and utilization level.
Outlook for Fiscal 2014
The company currently expects its fiscal 2014 revenues to be around $790 million with earnings of about $2.00 per share. Management also expects to derive significant advantages from business expansion, thereby delivering organic growth of 10%.
Moreover, management is confident that it will be able to strike a balance between its various resources and restore its current operating and utilization rate to historical rates in the next fiscal.
Team Inc. currently carries a Zacks Rank #4 (Sell). Some other stocks within the sector worth mentioning are AMN Healthcare Services Inc. (AHS), Cardtronics Inc. (CATM) and CTPartners Executive Search Inc. (CTP), each carrying a Zacks Rank #2 (Buy).
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