Actuant Downgraded to Hold


On Mar 22, Zacks Investment Research downgraded Actuant Corporation (ATU) to a Zacks #3 Rank (Hold) from a Zacks Rank #2 (Buy), on weak earnings outlook for 2013 despite a better-than-expected second-quarter of 2013.

Why the Downgrade?

Actuant provided weak earnings outlook for fiscal 2013 despite the company’s second quarter 2013 earnings of 38 cents per share beating the Zacks Consensus Estimate by a penny.

This diversified machinery company expects the current de-stocking plans of its main vendors, the original equipment manufacturers (OEMs), in North America to continue in the coming quarters, thus affecting Actuant’s sales. Also, the European economic condition is not expected to improve in the near term. Moreover, ATU’s revenue and margins are being hurt by mix shift toward some lower margin business segments.

Actuant fears that the foreign currency adjustments may also hurt revenues and earnings in future quarter. A slowdown in revenue from the Energy and Industrial segments due to lack of demand also remains an overhang.

In light of the above factors, Actuant lowered its fiscal 2013 earnings guidance to a range of $2.15-$2.25 per share from the previously announced range of $2.20-$2.30. Also, the sales guidance was pulled down to the range of $1.575 billion-$1.600 billion range from the range of $1.600-$1.625 billion.

Following the results, the Zacks Consensus Estimate for the fiscal third-quarter of 2013 decreased 3.0% to 65 cents per share.

Other Stocks to Consider

The following diversified machinery stocks are performing well and are worth considering.

1. Avery Dennison Corporation (AVY) holds a Zacks #1 Rank (Strong Buy)

2. Briggs & Stratton Corporation (BGG) holds a Zacks Rank #2 (Buy)

3. Active Power Inc. (ACPW) holds a Zacks Rank #2 (Buy).

Read the Full Research Report on AVY

Read the Full Research Report on ACPW

Read the Full Research Report on ATU

Read the Full Research Report on BGG

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