Bear of the Day: Albany International (AIN)

Albany International (AIN) is a global advanced textiles and materials processing company. It primarily serves the paper and aerospace industries through two segments: Machine Clothing and Albany Engineered Composites. The Machine Clothing segment supplies custom-designed fabrics used in paper production, while Albany Engineered Composites provides advanced materials and components for the aerospace market, including for commercial and defense applications.

Headquartered in Rochester, New Hampshire, Albany International operates across North America, Europe, and Asia, and is known for its innovation in materials technology and manufacturing expertise.

Albany International stock has struggled recently as earnings growth has been flat over the last five years along with the stock price. More recently the stock broke below a major level of support further dampening sentiment, while analysts have also downgraded the stock, giving it a Zacks Rank #5 (Strong Sell) rating. Although there will be a price where AIN is an appealing stock, based on the current setup, I think investors should avoid it.

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AIN Earnings Estimates Crater

Over the last two months, earnings estimates have seen some hefty revisions lower. Current quarter earnings estimates have declined by 34%, while FY24 have fallen by 8.2% and FY25 by 6.7%.

Earnings growth is also expected to slide 39% YoY for the current quarter and 15% for the current year. However, earnings are expected to pick up again, with FY25 expected to grow 22.3%. Sales are also expected to maintain a decent pace of growth with forecasts of 7.7% growth this year and 7.8% next year.

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Technical Breakdown in AIN Stock

In the chart below we can see that after languishing for nearly four years, the stock price flushed below a major level of support. This is not an encouraging development, and the analysts’ downgrades only adds selling pressure.

Until the stock can find some upward momentum, I would expect to see more selling as the company trades towards a discount valuation.

Image Source: TradingView

Should Investors Avoid AIN Stock?

Albany International is currently facing significant challenges, which have led to its "Strong Sell" rating. The company's earnings estimates have taken a substantial hit and although revenue is projected to grow this and next year, the declining earnings have raised concerns.

Additionally, the recent technical breakdown reflects ongoing bearish sentiment. This weak outlook, coupled with recent analyst downgrades, suggests that investors may want to avoid the stock until there are signs of a sustained recovery in earnings growth and market sentiment.

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