Thursday, March 27, 2014

Dresser-Rand Equity Research

By now, most investors in Dresser-Rand Group, Inc. , will have realized that the company recently gave disappointing earnings and guidance. While, some of its problems are stock specific, it was also subject to some industry wide issues that will also affect key competitors like General Electric Company. In addition, Dresser Rand's guidance for 2014 is significantly behind the long-term targets set by the management in 2010.  So, why is the company missing its long-term objectives, and what does it mean for the rest of the industry?

Dresser Rand's stock and sector specific problems
Revenue and operating income for 2013 came in at $3 billion and $321 million, respectively, when previous internal guidance was for $3.6 billion and $490 million. In addition, at its investor day in 2010, management had outlined its aim to reach $4 billion in revenue and $700 million in operating income in 2014. Given, that its recent guidance for 2014 is for revenue of $2.9 billion-$3.1 billion, and operating income of $377 million-$396 million, it's clear that growth hasn't quite worked out according to plan.