Barnes Group Inc. B has failed to impress investors with its recent operational performance due to persistent weakness in the Industrial segment. 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. B currently carries a Zacks Rank #5 (Strong Sell).
Business Weakness: Weakness in the Industrial segment owing to softness in the motion control solutions and automation businesses is affecting Barnes. Demand for products like multi-cavity molds has been particularly weak. Continued softness in the transportation, personal care and packaging end markets may impact the segment’s performance in the near term. Weakness in the China region is another concern. Amid these challenges, the segment’s third-quarter revenues declined 24% on a year-over-year basis.
Barnes Group, Inc. Price and Consensus
Barnes Group, Inc. price-consensus-chart | Barnes Group, Inc. Quote
Rising Costs: Barnes has been dealing with the adverse impacts of the high cost of sales. Increases in the cost of labor, materials, fuel, freight and shipping are pushing up the cost of sales, which surged 2.3% year over year in the third quarter of 2024. Cost of sales as a percentage of revenues was 66.9% in the quarter.
High Debt Level: High debt levels raise financial obligations and hurt the company’s profitability. Barnes exited the third quarter with a long-term debt of $1.1 billion. The company’s high debt level was primarily attributable to the funds raised for the MB Aerospace acquisition. The high debt level means that interest expenses are also substantial. Barnes’ interest expense was $65.2 million in the first nine months compared with $34.6 million in the year-ago period. The increase was attributable to a higher average interest rate, given the recapitalization of the company's debt structure.
Forex Woes: The company has a significant presence in the international markets. As a result, its financial performance is subject to various risks like the foreign currency exchange rate, interest rate fluctuations and hyperinflation in some foreign countries. The increased value of the U.S. dollar relative to the local currencies of the foreign markets may affect the company’s top line in the quarters ahead.
Stocks to Consider
Some better-ranked companies are discussed below.
Graham Corporation GHM 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 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.
RBC Bearings Incorporated RBC presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 2.5%.
In the past 60 days, the consensus estimate for RBC’s fiscal 2025 earnings has increased 0.5%.
Kadant Inc. KAI presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 17.2%.
The Zacks Consensus Estimate for KAI’s 2024 earnings has increased 1.8% in the past 60 days.
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RBC Bearings Incorporated (RBC) : Free Stock Analysis Report
Barnes Group, Inc. (B) : Free Stock Analysis Report
Kadant Inc (KAI) : Free Stock Analysis Report
Graham Corporation (GHM) : Free Stock Analysis Report
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