Earnings estimates have been falling for Colfax Corporation (CFX – Analyst Report) after the company provided weak guidance at its annual investor day conference in December. The company also reported disappointing Q3 results in October that prompted analysts to reduce their estimates as well.

Colfax is a Zacks Rank #5 (Strong Sell) stock.

Investors searching for value here will be disappointed too as shares trade at a premium to their industry on two important valuation metrics.

What Colfax Does

Colfax Corporation provides gas- and fluid-handling and fabrication technology products and services to commercial and governmental customers under the Howden, Colfax Fluid Handling and ESAB brands. It reports net sales through two segments: Gas & Fluid Handling (~50% of net sales year-to-date) and Fabrication Technology (the other 50%).

Its gas and fluid handling business supplies products such as pumps, fluid-handling systems and controls, specialty valves, heavy-duty centrifugal and axial fans, rotary heat exchangers and gas compressors, which serves a variety of end markets. Its fabrication business supplies welding equipment and consumables, cutting equipment and consumables and automated welding and cutting systems.

Soft Demand, Weak Guidance

Colfax reported disappointing third quarter results on October 23. Adjusted earnings per share of 57 cents missed the Zacks Consensus Estimate by 4 cents. Net sales increased 15% year-over-year to $1.164 billion, but this was also below the consensus of $1.193 billion. And organic sales fell 4% due to weak demand in both segments.

These soft Q3 results prompted a flurry of negative estimate revisions from analysts for both 2014 and 2015.

Additionally, the company provided disappointing guidance for both Q4 and 2015 at its annual investor day conference on December 16. Management expects 2015 adjusted EPS between $2.20-$2.40, which was well below consensus at the time.

Falling Estimates