Barnes Group Inc. B seems to be a nice investment option for investors seeking exposure in the machinery general industry. The company’s solid growth opportunities and fundamentals enhance its attractiveness.
It is based in Bristol, CT, and has a market capitalization of $2.6 billion. It specializes in manufacturing high-performance precision components, automation components and others as well as provides plastic injection molding technologies, fine-blanked solutions and others. The company presently carries a Zacks Rank #2 (Buy).
It belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 26% (with the rank of 66) of more than 250 Zacks industries.
In the past three months, the company’s shares have gained 3.8% compared with the industry’s growth of 4.5%. Notably, the S&P 500 has expanded 9% and the sector grew 0.9% during the same timeframe.
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Below we discussed why Barnes is a worthy investment option now.
Financial Performance and Projections: The company’s results in the first quarter of 2021 were impressive. Earnings surpassed the Zacks Consensus Estimate by 22.58% and sales exceeded the same by 11.18%.
In the quarters ahead, the company is poised to benefit from solid product offerings; focus on innovation, operational and commercial excellence; and strength in its Industrial segment (discussed below). It anticipates earnings of $1.78-$1.98 per share in 2021, higher than $1.65-$1.90 mentioned previously. On a year-over-year basis, the revised projection suggests growth of 9-21%. The company noted that foreign-currency translation tailwinds will boost sales by 2% in the year.
Industrial Business: Healthy demand for products in the industrial end markets aided Barnes’ top-line performance in first-quarter 2021. The segment’s revenues totaled $220 million, up 10.5% from the year-ago quarter. Organically, sales were up 8%, while forex tailwinds boosted the performance by 5%.
The segment is poised to leverage benefits from healthy engineered components, molding solutions, automation, and force & motion-control businesses. Product demand is solid from customers in personal care, automotive, packaging and medical markets.
Shareholders’ Rewards: Barnes believes in returning values to shareholders through dividend payments and share buybacks. In first-quarter 2021, it distributed dividends of $8.1 million to its shareholders. The current dividend rate is 16 cents per share.
As regard to the buybacks, the company refrained from such activities in the first quarter of 2021. However, it bought back shares worth $15.6 million in first-quarter 2020. Notably, the repurchase program was suspended earlier due to the pandemic and might be resumed to offset the dilutive impacts of equity compensation.
A healthy cash flow position will likely help it reward its shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 60 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at 44 cents for the second quarter of 2021, reflecting an increase of 7.3% from the 60-day-ago figure.
Barnes Group, Inc. Price and Consensus
Barnes Group, Inc. price-consensus-chart | Barnes Group, Inc. Quote
Also, earnings estimates are pegged at $1.91 for 2021 and $2.50 for 2022, suggesting increases of 6.1% and 5% from the 60-day-ago figures, respectively.
Other Key Picks
Some other top-ranked stocks in the industry are Tennant Company TNC, Applied Industrial Technologies, Inc. AIT and EnPro Industries, Inc. NPO. While both Tennant and Applied Industrial currently sport a Zacks Rank #1 (Strong Buy), EnPro carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for the stocks have improved for the current year. Further, earnings surprise for the last reported quarter was 82.81% for Tennant, 35.64% for Applied Industrial and 44.21% for EnPro Industries.
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