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No. of Recommendations: 2
I had sold it - but as you see, my thoughts were short-term oriented

2-19-15, $42.86, 1780-2096, 15.0-17.6, 11.0-13.0, dy-2.5%, fcy=6.6%, gcy=7.7%, ni=119, cf=162, cex=24

Conclusion
Based on the new lower $2.95-3.10 estimate, the shares would trade at 13.9x at the mid-point. There is $7.61 in part due to unfavorable working capital shifts which are supposed to correct themselves in the 2nd Half. I think the negatives and positives are well-balanced here and if they get some bad news in organic growth the stock could come under pressure (and the latest quarter was an easier compare). I’m not confident enough to be an owner.

Positives
Organic growth up 4.5%
Expects BS improvements in 2H
Jan has been solid and not seeing oil and gas pressure yet
Raised dividend and buying shares

Negatives
Narrowed EPS range
Upstream oil and gas will likely hit them – at 350m, possibly a 70m decline based of previous drop or 2.5%
Timing of oil and gas purchases looks wretched
Top line momentum goes down as they anniversary acquisitions

Q2 Dec 14
Sales up 19%
GM up due to acquisitions but worse SGA
Acquisitions at 15.8% with organic at 4.5%; but 1.4% fx hit
Operating up 17%
Did 72c vs. 61c

Notes
Ytd, bot 464k shares for 21.9m
CFFO was 1.1m vs. 32.6m last year
16 of 30 segments up
Jan has been soild – to mid to upper end of sales guidance
Feels 28% is lower operating margin target
Hit from oil patch is in front of them; 20 to 25% declines last time;
Upstream oil and gas is 12 of 13% sales in Q4 (692m total or 87m)

Mix
25.9% fluid power; 74.1% industrial products

Forecast
For year, sees 2.95-3.10 EPS
Q3 12-15% sales; 3-5% core and 9-10% acquistions
Q4 3-5% core and 5-6% acquisitions

Research
Muted

BS
Inventory up 66m with 42m due to acquisitions

Acquisitions
Knox 132m 7-1-14
Mexico 7-1-14
IRA 11-3-14
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