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Bear Of The Day: EnPro Industries (NPO)

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EnPro Industries (NPO - Free Report) is a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.  Let's take a look at why this stock has the lowest Zacks Rank and if there are any good reasons to keep this stock on your radar screen.

Description

EnPro Industries, Inc. is a diversified manufacturer of proprietary engineered products used in critical applications. EnPro Industries are a leader in sealing technologies, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other solutions that meet the needs of industries worldwide. EnPro Industries commitment to innovation, quality and value has propelled our brands to wide recognition and leading positions in their markets. EnPro businesses manufacture high quality products and provide high quality services to the customers. These products and services are sold into more than 40 distinct industries with thousands of applications, ranging from jet engines to chemical plants, oil wells to semiconductor clean rooms and Navy ships to tractor-trailer trucks. EnPro operates manufacturing facilities in North and South America, Europe and Asia.

Recent Earnings

The most recent earnings report was a miss of $0.22 or a negative 16% earnings surprise.  When that happens, analysts tend to take down their estimates for the full year ... and sometime the outlook for next year is lowered as well.  This is part of the reason the stock slipped to a Zacks Rank #5 (Strong Sell).

Estimate Revisions

Estimate revisions are the primary driver behind the Zacks Rank, as they move up and down the Rank follows right behing.  For NPO, the Zacks Consensus Estimate dropped for this quarter, this year and next year.

The annual numbers carry more weight for the Rank, so the moved from $4.48 to $4.21 for this year really hurt.

Next year saw a move from $4.87 to $4.45 and that is not a good sign.

Valuation

When estimates fall, the stock tends to follow along, and often times, multiples fall as well.  The forward PE for NPO is sitting at 16x while the price to book is at 1.6x.  Both of those metrics are on the low side, but I see the topline contracting, not growing.  The price to sales of 0.93x is less than 1 which means the market doesn't value incremental sales as much as it does for other companies.

Chart

EnPro Industries Price, Consensus and EPS Surprise

EnPro Industries Price, Consensus and EPS Surprise

EnPro Industries price-consensus-eps-surprise-chart | EnPro Industries Quote

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