After 12 months of missing earnings projections, Haynes International is presenting something of a quandary to stock analysts.
Last month, Zacks Investment Research listed Haynes (NASDAQ: HAYN) as a “Strong Sell” recommendation, citing four straight quarters of missed earnings projections.
At the same time, analysts at Topeka Capital Markets continue to list Haynes as a “Buy” recommendation, despite revising third quarter earnings projections downward.
Earnings per share were down 58 percent from the second quarter of 2012 in Haynes’ most recent quarterly report, issued May 2.
Third quarter results are due Aug. 8, and Topeka revised estimates from 50 cents per share down to 40 cents, citing historically low nickel prices and ongoing issues with the larger economy.
”While near-term earnings headwinds may persist, we continue to believe the company remains well positioned from a longer-term perspective and are maintaining our buy rating,” Topkea officials said.
Zacks officials, however, said the dip in earnings per share posed a red flag.
”Given that valuations don’t look particularly cheap for the stock at these levels, investors should consider avoiding it until its earnings momentum turns around,” was Zacks’ conclusion.
Haynes International develops, manufactures, and markets high-performance alloys primarily for the aerospace, chemical processing, and land-based gas turbine industries.
According to Zacks, the second quarter results were well under expectations.
During the second quarter conference call, Haynes President and CEO Mark Comerford noted that “slowing demand in [its] aerospace engine products market as the supply chain continued its cautious buying and order entry pattern from the first quarter.”
The company’s operating profit margin declined from 14.5 percent to 7.6 percent of revenues, Zacks reported.
”Market conditions remain extremely competitive, and market visibility in the near term is uncertain as to the direction of order entry and how quickly pricing may solidify. Pricing, volumes per order, backlogs and lead times are all under competitive pressures as we navigate through this challenging economic environment,” Comerford added.