Business snapshot
Colfax Corp (NYSE:CFX) is considered a global provider of fluid-handling and fabrication technology under several brands including Howden, ESAB and Colfax Fluid Handling. The company operates in two main business segments: gas and fluid handling and fabrication technology. Most of its revenue, $2 billion, or nearly 50% of the total 2012 revenue, was generated from the fabrication technology segment while the gas and fluid handling segment contributed $1.9 billion in revenue. However, gas and fluid handling enjoyed the higher operating margin at 7.4%, whereas the operating margin of the other segment was 7%. In 2012, Colfax produced a loss of $83.3 million, or a loss of $0.92 per share. The loss was mainly due to the restructuring and other related charges of more than $60 million and the provision for income taxes of more than $90.7 million.
The 2012 cash flow was still positive. The operating cash flow came in at $164 million while the free cash flow was $81 million. Colfax Corp (NYSE:CFX) does not leverage a lot in its operations. As of March 2013, it had $1.82 billion in equity, $235 million in cash and $1.53 billion in debt. What I am worried about is the company’s huge goodwill and intangible assets of nearly $2.73 billion. Thus, the tangible equity was negative at $910 million. Colfax recently hit a new 52-week high at over $50 per share, with a total market cap of around $4.6 billion. The market seems to value Colfax Corp (NYSE:CFX) quite expensively at 12.80 times EV/EBITDA.
Ampco-Pittsburgh is the cheapest valued
Compared to its peers including Ampco-Pittsburgh Corp. (NYSE:AP) and Flowserve Corporation (NYSE:FLS), Colfax has the highest valuation among the three. Ampco-Pittsburgh Corp. (NYSE:AP)‘s hostory dates back to 1929. It operates in two main business segments: Forged and Cast Rools and Air and Liquid Processing. The majority of its revenue, $189.5 million, or 64.7% of the total revenue, were generated Forged and Cast Rolls segment while the Air and Liquid Processing generated nearly $103.5 million in 2012 revenue.
In the first quarter 2013, Ampco-Pittsburgh Corp. (NYSE:AP)’s revenue has decreased, from $73.6 million last year to more than $69.6 million. The net income dropped significantly by 93.7%, from $2 million to $126,000. The decline in the net income was due to the lower revenue, higher other expense and higher equity losses in its Chinese joint venture. Ampco-Pittsburgh is trading at around $19 per share, with the total market cap of nearly $200 million. The market values the company cheaply at only 5.3 times EV/EBITDA.
