On Feb 4, Zacks Investment Research upgraded Manitowoc Company, Inc. ( MTW), a leading manufacturer of commercial foodservice equipment and cranes, to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
On Jan 30, 2014, Manitowoc reported fourth-quarter earnings per share of 47 cents, a 74% increase year over year helped by sound performance in the Foodservice segment, successful introduction of new products as well as the company’s cost control initiatives. The bottom line beat the Zacks Consensus Estimate of 33 cents.
The upbeat earnings helped Manitowoc attain a new 52-week high of $29.39 on Jan 31, up from its previous high of $26.01. The share price gained 15% in a day and closed at $28.45 on Jan 31.
For 2014, Manitowoc expects modest top-line growth in Crane segment revenues. The company forecasts high single-digit improvement in operating margins in the Crane segment.
Crane utilization and rental rates continue to improve with demand. Going forward, demand from the wind sector as well as from oil and gas markets is expected to grow. Manitowoc remains optimistic regarding its new products, which include an array of technologically advanced products that will be launched at ConExpo, the premier construction-equipment trade show that is slated to be held in Mar 2014. This could be a catalyst for the Crane segment. A turnaround in the construction sector will also boost Crane sales.
Foodservice revenues are expected to rise in mid-single digits and the company expects high-teens gain in Foodservice segment margins. The segment will be benefit from new manufacturing facilities, restructuring initiatives and new products.
In Jan, 2014, Manitowoc announced that it has refinanced some of its debt which is expected to save approximately $20 million of interest expense in 2014.
Estimates for Manitowoc have also been going up following its fourth-quarter earnings. For fiscal 2014, 5 out of 11 estimates have gone up by 3% from $1.46 to $1.51 over the past 7 days. For fiscal 2015, 2 out of 10 estimates have gone up by 8% to $1.90 over the same timeframe.
Other Stocks to Consider
Other players in the machinery industry, which look attractive at current levels, include Middleby Corp. ( MIDD), Terex Corp. ( TEX) and Zebra Technologies Corp. ( ZBRA). While Middleby holds a Zacks Rank #1 (Strong Buy), Terex and Zebra hold a Zacks Rank #2 (Buy).