Manitowoc (MTW) Stock Plunges 51% in 2022: Is Revival Likely?
Year 2022 was tough for The Manitowoc Company MTW, with its shares plunging 50.7% in the last 6 months against the industry’s 13.7% growth. The company has been witnessing a downtrend in order levels due to the ongoing global economic uncertainty. This, along with inflated costs, has been impacting the stock’s performance.
Factors Hurting the Stock
The company reported year-over-year declines in orders in the last two quarters. In the third quarter of 2022, orders were down 12.7% to $434 million from the prior-year quarter. Order trends are being impacted by the ongoing supply-chain and logistics challenges. The ongoing global economic uncertainty is weighing on customer sentiment, which is making them cautious about spending.
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Persisting inflation, rising interest rates and geopolitical tensions will continue to hinder customer confidence. The company had also been bearing the brunt of higher logistics and transportation costs, both ocean and land freight. Supply-chain shortages and skilled labor constraints are other headwinds. Manitowoc expects 2022 adjusted EBITDA to be in at the lower end of the earlier mentioned $130-$160 million.
Can the Stock Stage a Comeback?
Manitowoc’s innovation pipeline remains robust. Focus on innovation will continue to aid it in leading the industry by providing differentiated products of value to customers. The company has also been taking necessary steps to align production with changing levels of demand. It has been focused on cutting costs, increasing productivity and eliminating waste. Operational focus, a healthy balance sheet and market-leading products position it well as end markets recover.
Manitowoc’s aftermarket business has been performing well. In the third quarter of 2022, aftermarket sales moved up 27%. Growth is primarily stemming from higher-margin parts and services. The company is focused on improving this crucial part of the business. In sync with this, Manitowoc acquired the crane business of H&E Equipment Services, Inc. HEES in October 2021 to expand its ability to provide rentals, new sales, used sales, aftermarket parts and service to a variety of end-market customers. The purchase of HEES’s crane business is an important step in its journey to grow the less cyclical part of its business.
In North America, the demand from residential and non-residential construction will bolster the demand for Manitowoc’s equipment. Due to the U.S. Infrastructure Investment and Jobs Act, the rising investment in roads, bridges, airports and waterways represent a massive opportunity. Demand in the Middle East is expected to be robust, going forward. Saudi Arabia’s government has committed more than $1 trillion to a diverse slate of ambitious projects. Qatar and Kuwait are showing signs of growth. This bodes well for Manitowoc.
We believe that the above-mentioned factors will eventually benefit Manitowoc’s results and help its share price post a turnaround.
Manitowoc currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Industrial Products sector are KnowBe4 KNBE and Deere & Company DE. While KNBE currently sports a Zacks Rank #1 (Strong Buy), DE carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KnowBe4’s earnings surprise in the last four quarters was 216.7%, on average. The Zacks Consensus Estimate for the company’s 2022 earnings is pegged at 24 cents per share, indicating a 118% year-over-year increase. The consensus estimate has moved up 4% in the past 30 days. KNBE’s shares have appreciated 52% in the past six months.
The Zacks Consensus Estimate for fiscal 2023 earnings per share for Deere is pegged at $27.83, suggesting a 19.5% increase from that reported in the last year. The consensus estimate moved 2% upward in the last 30 days. DE has a trailing four-quarter average earnings surprise of 7%. DE’s shares have gained 42% in the past six months.
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The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
KnowBe4, Inc. (KNBE) : Free Stock Analysis Report
