WF vs. BEN: Which Stock Should Value Investors Buy Now?
Briggs & Stratton Corporation BGG has been off investors’ radar for quite some time now, due to input cost inflation, unfavorable weather and near-term challenges in its Engines business. Given these concerns, shares of Briggs & Stratton have lost 26.2% so far this year, underperforming its industry's decline of 0.4%.
Will Briggs & Stratton’s Woes Continue?
The company witnessed an unseasonably cold start to spring in the United States and Europe, which impacted its third-quarter fiscal 2018 results. The unfavorable weather continued into April for most of the Northern United States, including catastrophic snowstorms in the upper Midwest. This unusual weather pattern will likely impact fourth-quarter fiscal 2018 earnings as well.
Briggs & Stratton’s residential engine sales are anticipated to be impacted as channel partners remain cautious on adding inventory to prepare for a significant brand transition, with the launch of the Craftsman brand at Lowe's Companies, Inc. LOW. Also, engine sales in Europe will be affected as channel partners remain cautious about ordering inventory in the wake of new EU emission standards that will come to effect in the future.
Also, significant increases in freight rates remain a headwind. The availability of trucks has struggled to keep up with the demand, subsequent to the launch of electronic driver logs this year. Higher freight costs of $4 million (pre-tax) are expected to dent margins in fiscal 2018. The recently imposed tariffs on steel and aluminum will also lead to raw material inflation.
Other Unfavorable Readings
For the current fiscal, Briggs & Stratton has seen three downward estimate revisions versus no revision in the opposite direction over the past 60 days. This has led to 14% plunge in the Zacks Consensus Estimate to $1.31 per share over the past 60 days.
For the fiscal, three estimates moved down in the past 30 days compared with no upward revision. This has caused the Zacks Consensus Estimate to trend lower, to $1.60, marking an 11% drop, from $1.79 a share 60 days ago.
Undoubtedly, the above negatives substantiate the company’s Zacks Rank #5 (Strong Sell).
Forget Briggs & Stratton, Check These Industrial Product Stocks
DMC Global Inc.’s BOOM earnings estimates for full-year 2018 have increased 61% to $2.03 per share in the last 60 days while estimates for 2019 rose 28% to $2.94 per share. Its shares have appreciated 81% year-to-date. The company currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The fiscal 2018 and fiscal 2019 consensus estimates for W.W. Grainger, Inc. GWW have moved up 8% to $14.89 per share and 6% to $16.78 per share, respectively, in the last 60 days. The company carries a Zacks Rank #1. Its shares have increased 32%, year to date.
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