Colfax Shares Plunged Temporarily: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of pumps and fluid-handling products manufacturer Colfax (NYS: CFX) have had a wild day, to say the least, with shares dropping 11% shortly after the market opened only to gain nearly all of those losses back.

So what: The culprit here appears to be its fourth-quarter earnings, which missed Wall Street expectations. Higher acquisition-related expensing resulted in Colfax reporting a $0.40 profit on $177.8 million in sales. The consensus expectation was for a profit of $0.45 on $189.7 million in revenue. Management feels confident that its acquisition strategy and the synergies it will realize from those combinations will result in savings of $100 million each year.

Now what: Colfax still has a lot of work to do, from what I can tell. Management spoke of $100 million in synergies, but also warned that implementing those cost-cutting measures won't be a walk in the park. Said CEO Clay Kiefaber: "this organization is operating way below its collective capability." That's all you need to know about Colfax right now. Wait for the company to get its act together and perhaps then we can give it another look.

Craving more input? Start by adding Colfax to your free and personalized watchlist so you can keep up with the latest news from the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners