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Actuant Rises despite Lower Income and Revenue in Fiscal 1Q16

Gabriel Kane

Actuant's Revenue and Income Fell in Fiscal 1Q16

Actuant Corporation’s price movement

Actuant Corporation (ATU) has a market cap of $1.4 billion. After the company’s fiscal 1Q16 earnings report, ATU rose by 5.1% to close at $22.91 per share in yesterday’s trade. ATU’s price movements on weekly, monthly, and YTD bases are 0.26%, -0.09%, and -15.7%, respectively.

At times, the stock has broken the support of all moving day averages in 2015. Currently, ATU is trading 3.0% below its 20-day moving average, 0.48% below its 50-day moving average, and 0.40% above its 200-day moving average.

The SPDR S&P 600 Small Cap Value ETF (SLYV) invests 0.43% of its holdings in Actuant Corporation. The ETF aims to track a market cap–weighted index of US small cap value stocks. The index selects stocks with market capitalizations between $250 million and $1.2 billion. The YTD price movement of SLVY is -5.6%, as of December 16, 2015.

Actuant Corporation’s (ATU) competitors and their market caps are listed below:

  • Parker-Hannifin Corporation (PH)—$12.9 billion
  • Dover Corporation (DOV)—$9.2 billion
  • Curtiss-Wright Corporation (CW)—$3.1 billion
  • ITT Corporation (ITT)—$3.1 billion

Actuant Corporation’s performance in fiscal 1Q16

Actuant Corporation (ATU) reported fiscal 1Q16 net sales of $305.0 million, a fall of 7.0% when compared to net sales of $327.8 million in fiscal 1Q15. Sales of its industrial and engineered solutions segments fell by 13.2% and 10.0%, respectively, and sales of its energy segment rose by 2.1%, in fiscal 1Q16, as compared to fiscal 1Q15.

The company’s cost of products sold as a percentage of net sales rose by 4.9%, and its operating margin fell by 29.1% in fiscal 1Q16, as compared to fiscal 1Q15. It reported restructuring charges of $4.4 million in fiscal 1Q16.

Actuant Corporation’s net income and EPS (earnings per share) fell to $15.4 million and $0.26, respectively, in fiscal 1Q16, as compared to its net income and EPS of $24.7 million and $0.38, respectively, in fiscal 1Q15. The company’s non-GAAP ( generally accepted accounting principles)  EBITDA (earnings before interest, tax, depreciation, and amortization) fell 29.0% to $37.2 million in fiscal 1Q16, as compared to fiscal 1Q15.

Meanwhile, the company’s cash and cash equivalents and inventories rose by 1.8% and 0.63%, respectively, in fiscal 1Q16 on a quarter-over-quarter basis. The company’s current ratio fell to 2.3, and its debt-to-equity ratio rose to 1.44, in fiscal 1Q16, as compared to its current ratio and debt-to-equity ratio of 2.4 and 1.43, respectively, in fiscal 4Q15.

Projections

The company has made the following projections for fiscal 2Q16:

  • Net sales in the range of $270.0–$280.0 million
  • EPS in the range of $0.17–$0.22 (excluding restructuring charges)

This projection incorporates the normal seasonal slowdown experienced across nearly all of the company’s business segments.

According to Robert C. Arzbaecher, Actuant Corporation’s chairman, president, and CEO, “We currently expect sales to be in the range of $1.165–$1.200 billion and EPS of $1.25–$1.40 per share. Our EPS guidance excludes charges associated with the previously announced $25 million restructuring program. Finally, we continue to expect to generate free cash flow of ~$110–$120 million in fiscal 2016.”

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