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Manitowoc (MTW) Up 55% YTD: Will the Rally Continue in 2021?

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The Manitowoc Company Inc. MTW has fared well so far this year with the stock gaining on the back of better-than-expected results, and improvement in order levels and backlog. The stock had suffered a setback in 2020 primarily due to the impact of the COVID-19 pandemic and a weak crane market.

The pandemic also disrupted the company’s supply chain. Cumulatively these factors led to the company reporting losses in the first two quarters of 2020. Shares of the company tanked 23.9% in 2020, against the industry’s rally of 22.6%. However, the stock staged a comeback this year with year-to-date gain of 55.2%, outperforming the industry’s growth of 26.7%.

Improving Order Levels Driving Growth

In the wake of weak demand, Manitowoc has been cutting down discretionary spending and other costs, while remaining focused on improving productivity and eliminating waste. These actions, along with improving order levels enabled the company return to profitability in the third quarter of 2020. This momentum continued in the fourth quarter, with orders at $508.6 million, reflecting year-over-year growth of 8% primarily driven by a couple of large crawler orders in the United States.

Backlog as of Dec 31, 2020 totaled $543.2 million, highlighting an increase of 14.3% year over year. The upside can mainly be attributed to the increased crawler crane orders and the timing of shipments in fourth-quarter 2020. Order levels are likely to improve in 2021 backed by the ongoing economic recovery and stimulus packages enacted by several countries.

As of Dec 31, 2020, Manitowoc had total liquidity of $543 million, with cash balance of around $129 million. The company’s total debt-to-total capital ratio was at 0.33 as of Dec 31, 2020. Its innovation pipeline remains robust. Focus on innovation will continue to aid it in leading the industry by providing differentiated products that add value to customers. Operational focus, healthy balance sheet and market leading products position it well for growth as end markets recover.

Manitowoc’s aftermarket business also continues to perform well. Growth is primarily stemming from higher-margin parts and services. It also continues to evaluate acquisition opportunities to accelerate product development programs in its all-terrain product line. Manitowoc plans to scale-up its Chinese tower crane business and to spend $15 million to expand its tower crane rental fleet in Europe. Notably, China’s tower crane market is the largest in the world. These strategic initiatives will boost growth as the crane industry rebounds.

Zacks Rank and Stocks to Consider

Manitowoc currently carries a Zacks Rank #3 (Hold).

Meanwhile, investors interested in the Industrial Products sector can consider better-ranked stocks like Deere & Company DE, AGCO Corporation AGCO and Crown Holdings, Inc. CCK. All of these stocks carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Deere has a projected earnings growth rate of 82.5% for fiscal 2021. So far this year, the company’s shares have gained 39%.

AGCO has an estimated earnings growth rate of 29.9% for the ongoing year. The company’s shares have surged 41% so far this year.

Crown Holdings has an expected earnings growth rate of 16.2% for 2021. The stock has appreciated 2% year to date.

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