Colfax Corporation Stock Downgraded (CFX)

NEW YORK ( TheStreet) -- Colfax Corporation (NYSE: CFX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • CFX's very impressive revenue growth greatly exceeded the industry average of 16.7%. Since the same quarter one year prior, revenues leaped by 459.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for COLFAX CORP is currently lower than what is desirable, coming in at 28.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.90% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$109.28 million or 2419.14% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Colfax Corporation designs, manufactures, installs, maintains, and sells gas-and fluid-handling and fabrication technology products and services to commercial and governmental customers worldwide. The company offers rotary positive displacement and specialty centrifugal pumps. Colfax has a market cap of $2.73 billion and is part of the industrial goods sector and industrial industry. Shares are down 2.3% year to date as of the close of trading on Monday.

You can view the full Colfax Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.