I've never been the biggest fan of Colfax (NYSE:CFX), mostly because I've felt in the past that investors and analysts veer into the “fanboy” zone with the comparisons of Colfax and Danaher (NYSE:DHR), overlooking the meaningful differences in business mix and the fact that ESAB (the core of the welding operation) needed a lot of work. Colfax got beat down pretty badly during the industrial recession, with even management acknowledging at one point that they underestimated the speed and severity of the downturn.
Since the low point in early 2016, though, Colfax shares have bounced back – rising more than 100% from the low and surpassing the likes of Lincoln Electric (NASDAQ:LECO), Dover (NYSE:DOV), and Illinois Tool Works(NYSE:ITW). I'm not surprised that the shares have rebounded as conditions in end-markets like mining, power gen, general industrial, and oil/gas have recovered, but I am a little surprised that there could still be upside in the shares. I don't think that long-term revenue growth of 4% or FCF margins in the 10% to 12% range are all that ambitious, but it seems to support a fair value in the mid-$40's today.
