|Shares Out. (in M):||94||P/E||0.0x||0.0x|
|Market Cap (in $M):||4,096||P/FCF||0.0x||0.0x|
|Net Debt (in $M):||0||EBIT||0||0|
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Summary Thesis: Colfax Corporation (Colfax or CFX) is a diversified industrial companies with a strong and sustainable market positioning operating in high growth end markets and regions. It is pursuing the successful business model pioneered by the likes of Danaher and Roper whereby the management is focusing on building, both organically and through acquisitions, a portfolio of highly differentiated products with superior brands and technologies targeting large high growth markets in which performance and quality matter. Through continuous investment in developing internal talent and relentlessly focused on streamlining operations and improving efficiency, the company plans to generate very high EPS growth 25-30% CAGR over the next 3+ years. The guidance seems achievable and it is predicated mainly on cost savings via the integration of the recent transformational Charter acquisition. The multiples are in line with comparable companies, despite the higher growth. Overall we believe this company can generate 20-25% CAGR of total investment returns over the next 2-3 years and it is therefore recommended for purchase.
Colfax was formed in 1995 and has completed a number of acquisitions and divestitures to strategically focus the business. The most recent transaction of Charter International (January 2012) roughly quadrupled the company’s revenue base and is consistent with Colfax’s plan to become a large, diversified industrial company. Colfax has two reportable segments:
Furthermore, guidance seems achievable for the following reasons.
Roughly 75% of Howden’s projected sales are in the backlog, with the remaining 25% representing aftermarket/flow business. While deliveries could get pushed out if the economy further softens, we see the 4-6% organic growth forecast as reasonably attainable. Currently the book to bill ratio is 1.01
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