Zacks Investment Research upgraded Barnes Group Inc. (B) to a Zacks Rank #1 (Strong Buy) on Dec 28, 2013.
Why the Upgrade?
Barnes Group’s financial results for the third-quarter 2013, reported on Oct 25, were impressive and its shares have grown by 6.9% since then. Also, the company’s Zacks Consensus Estimate for 2013 increased by 0.5% to $1.89 and by 9.0% to $2.31, for 2014, in the last 60 days. A brief discussion of the company’s third-quarter 2013 performance is provided below.
Barnes Group reported adjusted earnings per share of 39 cents, up 8.3% from 36 cents reported in the year-ago quarter. Earnings were however, 25% below the Zacks Consensus Estimate of 52 cents.
Net sales in the quarter increased 15.9% aided primarily by the 25.1% year-over-year increase in sales from the Industrial segment and the 3.4% rise in sales from the Aerospace segment. Gross margin escalated 300 basis points as the improvement in sales was only partially offset by higher cost of sales. Operating margin was up 70 basis points.
Barnes Group anticipates adjusted earnings per share to range within $1.75–$1.80, reflecting an increase of 15%–18% over 2012 earnings. Revenues are expected to grow 16% above 2012.
In Oct 2013, Barnes Group completed acquiring Manner. The latter is well recognized for high precision mold-making, valve gate hot runner systems, and system solutions for the medical/pharmaceutical, packaging, and personal care/health care industries. The acquired assets will be integrated with Barnes Group’s Industrial segment. Such an acquisition, we believe, will prove advantageous for the company in the quarters ahead.
Other Stocks to Consider
Barnes Group is a $2.0 billion company and a well-known aerospace and industrial manufacturing and service provider. Some other stocks worth considering in the industry include Xylem Inc. (XYL), Middleby Corp. (MIDD) and DXP Enterprises, Inc. (DXPE). All the three companies carry a Zacks Rank #2 (Buy).