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Here's Why You Should Consider Buying Altra Industrial (AIMC)

Zacks Equity Research
·3 min read

Altra Industrial Motion Corp. AIMC is well-poised for growth, backed by its solid product portfolio, strength across factory automation and medical end markets, cross-selling programs, and supply-chain initiatives.

The company currently carries a Zacks Rank #2 (Buy).

Price Performance

Shares of Altra Industrial have gained 70.4%, outperforming the industry’s growth of 18.3% in the past three months. Meanwhile, the S&P 500 Index has rallied 14.8% in the same timeframe.

 


 

Below we discussed why it is worth investing in the company.

Multiple Tailwinds: Though the coronavirus outbreak-led uncertainties are concerning, Altra Industrial’s diversified business structure, pricing actions, robust liquidity position and cost-management initiatives might prove beneficial in the quarters ahead.  Amid the pandemic, the company increased the production of critical components required in infusion systems, CT scanners, ventilators and other products. Going forward, it is likely to benefit from strength across the factory automation and medical equipment markets.

Moreover, its healthy cash balance allows it to pay its financial obligations. Notably, exiting the first quarter of 2020, the company had $327 million cash available and $195 million of liquidity under its credit line.

Buyouts: Altra Industrial believes in gaining market share and boosting growth opportunities through acquisitions. It completed the combination of its operations with four companies of the Automation and Specialty business of Fortive in October 2018. The combined business has greater access to end markets, solid product offering for customers and better technological expertise. Moving ahead, synergies like value engineering, the development of business system, the optimization of supply chain and facility consolidations are likely to be realized.

In addition, the company’s technological expertise, e-commerce capabilities and working capital improvement program are expected to be beneficial.

Estimate Trend: In the past 30 days, analysts have increasingly become bullish on the company, as evident from positive earnings estimate revisions. Notably, the Zacks Consensus Estimate for its 2020 earnings has trended up from $1.84 to $1.86 on one upward estimate revision against none downward. In addition, over the same timeframe, the consensus estimate for 2021 earnings has trended up from $2.43 to $2.50 on two upward estimate revisions against none downward.

Other Stocks to Consider

Some other top-ranked stocks from the same space are Colfax Corporation CFX, Chart Industries, Inc. GTLS and The Middleby Corporation MIDD. All the companies currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Colfax delivered a positive earnings surprise of 6.75%, on average, in the trailing four quarters.

Chart Industries delivered a positive earnings surprise of 1.41%, on average, in the trailing four quarters.

Middleby delivered a positive earnings surprise of 7.54%, on average, in the trailing four quarters.

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Colfax Corporation (CFX) : Free Stock Analysis Report
 
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Altra Industrial Motion Corp. (AIMC) : Free Stock Analysis Report
 
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