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Atkore (ATKR) Rallies 46% YTD: What's Driving the Stock?

Zacks Equity Research

Atkore International Group Inc.’s ATKR price performance has been impressive so far in 2019, with shares having gained 46.2%. Solid financial performance and growth opportunities have supported positive market sentiments for this stock.

The Harvey, IL-based company belongs to the Zacks Wire and Cable Products industry, which in turn belongs to the Zacks Industrial Products sector. It currently has a VGM Score of A and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, Atkore has outshined its industry’s growth of 12.4%, the sector’s rally of 7.4% and the S&P 500’s improvement of 15.3%.


It is worth mentioning here that the company has reported better-than-expected results for three quarters in a row so far in 2019. Average positive earnings beat for these three quarters (or the first three quarters of fiscal 2019, ending September) was 9.36%. Notably, earnings in the last reported quarter surpassed estimates by 13.04%.

Factors Driving the Stock

We believe that various factors are playing role in Atkore’s success. Volume growth in electrical categories and product launches in the Electrical Raceway segment have been boons. These apart, the company’s focus on enhancing productivity, improving operational efficiency and lowering dependence on debts is adding to its attractiveness.

Also, its acquisitive nature has been boosting growth opportunities. Since acquired in June 2019, United Structural Products has been strengthening Atkore’s footprint in the cable tray industry. Moreover, Atkore acquired Rocky Mountain Colby Pipe Company in August this year. The Cor-Tek brand of Rocky Mountain will expand Atkore’s presence in the commercial, residential and industrial electrical markets.

In addition to the above-mentioned factors, we believe that impressive outlook for fiscal 2019 (ending September 2019) created positive sentiments for the stock. While healthy activities in end markets served are projected to drive growth within the Electrical Raceway segment, volume gain from various renewable energy projects will likely be boon for the Mechanical Products & Solutions segment.

The company raised adjusted earnings before interest, tax, depreciation and amortizations (EBITDA) projections for fiscal 2019 from $300-$310 million to $317-$322 million. On a segmental basis, adjusted EBITDA will be $287-$292 million for Electrical Raceway, higher than the previously stated $280-$290 million, and $62-$66 million for Mechanical Products & Solutions, up from $57-$62 million mentioned earlier. Adjusted earnings per share in the fiscal year are anticipated to be $3.55-$3.63, up from $3.25-$3.40 stated earlier.

Earnings estimates for the company have been raised in the past 60 days, reflecting positive sentiments about its growth prospects. Earnings estimates for the current fiscal year and the next year have grown 3.6% and 3.7% from the respective 60-day-ago figures.

Atkore International Group Inc. Price and Consensus

 

Atkore International Group Inc. Price and Consensus

Atkore International Group Inc. price-consensus-chart | Atkore International Group Inc. Quote

Atkore’s Performance Versus Three Other Picks

Atkore has outperformed two industry peers so far in 2019. These stocks are Belden Inc. BDC and Encore Wire Corporation WIRE, with respective year-to-date gains of 9.2% and 7.6%. Another stock from the sector is Colfax Corporation CFX, which recorded year-to-date gain of just 30.1%.

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Encore Wire Corporation (WIRE) : Free Stock Analysis Report
 
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Atkore International Group Inc. (ATKR) : Free Stock Analysis Report
 
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