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Here's Why You Should Steer Clear of Barnes Stock Right Now
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Barnes Group Inc. (B - Free Report) is grappling with persistent weakness due to softness across the Industrial segment and high cost of sales. Also, given the company’s extensive international presence, foreign currency headwind is an added uncertainty.
Headquartered in Bristol, CT, Barnes is a global diversified manufacturer and supplier of highly engineered products, innovative solutions and differentiated industrial technologies. It boasts a diverse range of market-leading brands like Seeger Orbis and Associated Spring Raymond.
Barnes currently carries a Zacks Rank #4 (Sell). In the past year, the stock has gained 19.5% compared with the industry’s 34.5% growth.
Image Source: Zacks Investment Research
Business Weakness: Barnes’ Industrial segment is experiencing weakness, owing to the slowdown in the broader economy and supply-chain challenges. Softness in the motion control solutions and automation businesses is concerning. Demand for products like multi-cavity molds has been particularly weak. Ongoing weakness in the transportation, personal care and packaging markets is likely to affect the segment's performance in the short term. Weakness in the China region is another concern.
Rising Costs: High debt levels are increasing financial obligations and impacting Barnes' profitability. As of the end of the second quarter of 2024, the company had a long-term debt of $1.15 billion, with a long-term debt-to-capital ratio of 0.47, higher than the industry average of 0.33. This raises concerns about the stock since the debt was incurred for the MB Aerospace acquisition. Interest expenses have surged, totaling $45.6 million in the first half of the year compared with $11.8 million in the same period last year, due to higher interest rates following debt recapitalization.
Forex Woes: The company's global operations expose it to the risk of unfavorable currency fluctuations. This is because a strengthening U.S. dollar is likely to require it to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry.
GHM delivered a trailing four-quarter average earnings surprise of 133.3%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 17.3%.
Crane Company (CR - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.3%.
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Here's Why You Should Steer Clear of Barnes Stock Right Now
Barnes Group Inc. (B - Free Report) is grappling with persistent weakness due to softness across the Industrial segment and high cost of sales. Also, given the company’s extensive international presence, foreign currency headwind is an added uncertainty.
Headquartered in Bristol, CT, Barnes is a global diversified manufacturer and supplier of highly engineered products, innovative solutions and differentiated industrial technologies. It boasts a diverse range of market-leading brands like Seeger Orbis and Associated Spring Raymond.
Barnes currently carries a Zacks Rank #4 (Sell). In the past year, the stock has gained 19.5% compared with the industry’s 34.5% growth.
Image Source: Zacks Investment Research
Business Weakness: Barnes’ Industrial segment is experiencing weakness, owing to the slowdown in the broader economy and supply-chain challenges. Softness in the motion control solutions and automation businesses is concerning. Demand for products like multi-cavity molds has been particularly weak. Ongoing weakness in the transportation, personal care and packaging markets is likely to affect the segment's performance in the short term. Weakness in the China region is another concern.
Rising Costs: High debt levels are increasing financial obligations and impacting Barnes' profitability. As of the end of the second quarter of 2024, the company had a long-term debt of $1.15 billion, with a long-term debt-to-capital ratio of 0.47, higher than the industry average of 0.33. This raises concerns about the stock since the debt was incurred for the MB Aerospace acquisition. Interest expenses have surged, totaling $45.6 million in the first half of the year compared with $11.8 million in the same period last year, due to higher interest rates following debt recapitalization.
Forex Woes: The company's global operations expose it to the risk of unfavorable currency fluctuations. This is because a strengthening U.S. dollar is likely to require it to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry.
Stocks to Consider
Some better-ranked companies are discussed below.
Graham Corporation (GHM - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GHM delivered a trailing four-quarter average earnings surprise of 133.3%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 17.3%.
Crane Company (CR - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.3%.