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Barnes’ 3Q Profit Drops 66%, Sees Lower 4Q Sales

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Barnes' 3Q earnings per share plunged 66.3% to $0.30 year-on-year, but surpassed the Street consensus of $0.27. The global aerospace manufacturer said that the profit decline was due to lower revenues and operating margin contraction.

Barnes’ (B) 3Q revenues fell 28% to $269 million year-over-year, reflecting the negative impact of the COVID-19 pandemic. Analysts’ were looking for $245.8 million in revenues.

The company’s CEO Patrick J. Dempsey said that its industrial business saw “promising signs of recovery in select end markets” while the aerospace business managed to deliver higher sales on a sequential basis amid the challenging business environment. (See B stock analysis on TipRanks).

Barnes expects the COVID-19 pandemic to continue to impact its 4Q results with organic sales forecast to be 20% lower than a year ago. However, the company anticipates 4Q organic sales to increase by about 5% higher than in 3Q. In addition, 4Q EPS is expected in the range of $0.27-$0.35, compared with analysts’ estimates of $0.34.

Following the 3Q results, Oppenheimer analyst Christopher Glynn maintained a Buy rating on the stock with a price target of $50 (26.1% upside potential). Glynn expects “nominally positive Industrial organic growth by 1Q21, and all sub-segment businesses growing in 2021.” The analyst added that “We expect positive Aero organic by 2Q21 quite comfortably, but modestly negative for the year with 1Q20 comparison still discontinuously high vs. present realities.”

Currently, the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy analyst consensus. The average price target of $50 implies upside potential of about 26.1% to current levels. Shares have declined by over 36% year-to-date.

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