Yahoo Finance Here's Why Hold Strategy is Apt for the Barnes (B) Stock Now
Barnes Group Inc. B has been benefiting from strong momentum in the Aerospace segment and accretive acquisitions despite weakness in the Industrial segment and the rising cost of sales.
Let us discuss the factors why investors should retain the stock for the time being.
Growth Catalysts
Business Strength: Barnes is benefiting from the strong performance of the Aerospace segment. Strength in the original equipment manufacturer (OEM) and Aftermarket businesses is supporting the segment’s revenues. Continued growth within narrow-body airframe production and wide-body airframe production is aiding the OEM business, whereas the Aftermarket business is being driven by increased maintenance, repair and overhaul (MRO) activity. The MB Aerospace acquisition is also aiding the segment.
The Aerospace segment’s revenues increased 89% on a year-over-year basis in the first quarter. In the near term, the segment is likely to benefit from robust demand for commercial air travel. The increased use of older planes with narrow-body engines like the CFM56 and V2500 should be beneficial.
Accretive Acquisition: B solidifies its product portfolio and leverages business opportunities through asset additions. In August 2023, the company completed the acquisition of MB Aerospace, thereby expanding its aerospace business’ global OEM offering and aftermarket repair capabilities. It is the largest acquisition in Barnes’ history. The buyout has enhanced Barnes’ ability to deliver value-added solutions across the aero-engine value chain, broadened customer relationships and widened exposure to the defense industry. MB Aerospace has augmented Barnes’ Aerospace segment, with the buyout contributing revenues of $82.2 million to it in the first quarter.
Investments in Product Development: Barnes is poised to benefit from its well-diversified portfolio. Also, investments in product development, new technologies and manufacturing processes are anticipated to be beneficial over the long term. For instance, in April 2024, Barnes expanded its MRO facility in East Granby. This will likely bolster its capability to cater to the increasing demand for existing and new engine programs and product lines. Also, in February, Barnes unveiled a component repair facility in Singapore to support growing customers’ requirements in the region. This move will enable the company to cater to the increasing demands of the aerospace industry and boost its position in the engine component repair and maintenance industry.
Rewards to Shareholders: Barnes remains committed to rewarding its shareholders handsomely through dividend payouts and share buyback programs. The company’s dividend payments totaled $8.1 million, nearly flat year over year, in the first three months of 2024. In 2023, Barnes rewarded shareholders with dividends of $32.4 million.
In light of the above-mentioned positives, we believe, investors should retain B stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company have increased 26% in the year-to-date period compared with the industry’s 8.4% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below.
Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 2.1% in the past 60 days. The stock has risen 16.4% in the year-to-date period.
Belden Inc. BDC presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 14.7%, on average.
The consensus estimate for BDC’s 2024 earnings has increased 8.3% in the past 60 days. Shares of Belden have risen 22.2% in the year-to-date period.
Crane Company CR presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.3% in the past 60 days. Its shares have risen 24.4% in the year-to-date period.
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Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Belden Inc (BDC) : Free Stock Analysis Report
Barnes Group, Inc. (B) : Free Stock Analysis Report
Crane Company (CR) : Free Stock Analysis Report
