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John Bean (JBT) Scales 52-Week High: More Upside Left?

·4 min read

Shares of John Bean Technologies JBT scaled a fresh 52-week high of $152.88 during the trading session on Sep 10, before retracting a bit to close at $150.94. The company’s forecast-beating second-quarter 2021 results, improved order levels, focus on acquisitions as well as cost-control actions are driving this share-price appreciation.

Earnings & Sales Beat Estimates in Q2

The company delivered adjusted earnings of $1.19 per share during the second quarter, beating the Zacks Consensus Estimate of $1.00. Revenues of $476 million also surpassed the consensus mark of $453 million. Both the top- and bottom-line figures increased 15.6% and 9% year over year, respectively.

John Bean has a trailing four-quarter average earnings surprise of 16.8%.

Driving Factors

The company’s FoodTech segment has been witnessing sequential improvement in order levels for the past four quarters. Due to the pandemic, the food industry has witnessed a surge in retail demand, driven by packaged food purchases and positive recovery for certain customers across the food industry, specifically those in the quick service restaurant drive-through businesses and those servicing the constant "eat-at-home" trend. The company reported robust orders for its automated guided vehicle business. This is expected to continue in the current year, which bodes well for the FoodTech segment.

The AeroTech segment is also witnessing robust orders levels, aided by the recovery in the passenger airline industry. Passenger air travel has been picking up from the 2020 levels, owing to the global vaccination initiatives and re-opening of travel roads. Airport infrastructure spending, which is subject to long lead time contracts, is expected to be healthy for the balance of 2021.

During the second-quarter earnings call, the company projected adjusted earnings per share between $4.60 and $4.80 for 2021, up from the prior estimate of $4.40-$4.60. The mid-point of the range suggests growth of 19% from 2020. The company expects total revenue expansion of 10-13% for the ongoing year. The upbeat guidance can be attributed to the company’s solid results so far this year and strong order trends.

John Bean has been delivering strong EBITDA margin performance, given the company’s recent process-optimization efforts and JBT Operating System discipline as well as rapid implementation of cost-cutting actions. In third-quarter 2020, the company implemented a restructuring plan which is expected to generate incremental cost savings during 2021. John Bean’s Elevate plan is likely to drive sustained growth and margin expansion. Per the plan, the company is focusing on accelerating the development of innovative products and services to provide customers with solutions, which will enhance yield and productivity.

The company is capitalizing on its extensive installed base to expand its recurring revenues (which accounts for around 40% of its revenues) from the aftermarket parts and services, equipment leases, consumables and airport services. In June, John Bean acquired Prevenio, which will help expand the recurring revenue stream and the company’s ability to address food safety needs of customers. Earlier this year, it bought AutoCoding Systems to strengthen its abilities in the growing global market for in-line coding and inspection solutions. John Bean is focused on acquiring companies which add complementary products and enable it to offer more comprehensive solutions to customers.

Positive Growth Projections

The company’s earnings estimate for the current year is pegged at $4.75, suggesting year-over-year growth of 20.5%.

Price Performance

John Bean’s shares have gained 32.8%, so far this year, compared with the industry’s growth of 47.3%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Other Stocks to Consider

John Bean currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the Industrial Products sector include Encore Wire Corporation WIRE, Deere & Company DE and Lincoln Electric Holdings, Inc. LECO. While Encore Wire sports a Zacks Rank #1, Deere & Lincoln Electric carry a Zacks Rank #2, at present.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Deere has an estimated earnings growth rate of 117.5% for fiscal 2021. The company’s shares have gained 36.3% so far this year.

Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.

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