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Manitowoc Poised to Gain on Product Innovation & Cost Control

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On Nov 12, we issued an updated research report on The Manitowoc Company Inc. MTW.  The company is well poised to benefit from product innovation, solid after-market business, persistent focus on cost control, improving productivity and pricing actions.

Solid Q3 Results, Upbeat 2019 Outlook

Manitowoc reported third-quarter 2019 adjusted earnings per share of 54 cents, beating the Zacks Consensus Estimate of 33 cents by a margin of 63.6%. The company had reported earnings per share of 20 cents in the prior-year quarter. The solid quarterly results were driven by continued operational improvements and margin expansion.
 



Following the impressive third-quarter 2019 results, Manitowoc’s shares have gained 14% compared with the industry’s growth of 1%.

Manitowoc’s 2019 revenue guidance lies in the range of 1.85-$1.88 billion. Compared with revenues of $1.85 billion reported in fiscal 2018, the mid-point of the guidance reflects year-over-year growth of 1%. The company’s fiscal 2019 EBITDA guidance is at $145-$160 million. The mid-point of the guidance suggests year-over-year growth of 31%.

Pricing Actions & Cost Control to Sustain Margins

Continued introduction of new products, productivity initiatives and cost controls will help the company sustain margins despite challenging market conditions. Manitowoc continues to execute its strategy to cover cost inflation through pricing actions. The company also remains focused on cost control, reducing headcount, increasing productivity and eliminating waste.

It is also taking aggressive steps to support supply chain partners to ensure timely delivery of components, combined with alternative sourcing strategies. This will support its financial goals.

Poised Well for the Long Run

As of third quarter-end, Manitowoc’s net debt to adjusted EBITDA ratio remains a healthy 1.6. This will enable the company to implement growth strategies while meeting ongoing operational needs. The company also has a strong pipeline of acquisitions.

Manitowoc’s aftermarket business continues to perform well. Growth is primarily stemming from higher-margin parts and services. The company remains focused on improving this crucial part of the business. Further, the company noted that there is scope of increasing revenues from the Middle East. It continues to strengthen partnerships with channel partners in the region to capitalize on the recovery in the markets. Manitowoc’s focus on innovation in a bid to provide differentiated products that add value to its customers will aid it in maintaining its industry leading position.

Manitowoc’s long-term outlook remains strong. The company continues to be committed to achieving its target of double-digit operating margins improvement year over year. In fact, the company anticipates achieving long-term target of double-digit operating margins by 2020 through continued streamlining organizational structure.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Northwest Pipe Company NWPX, Tennant Company TNC and Casella Waste Systems, Inc. CWST. While Northwest Pipe and Tennant sport a Zacks Rank #1 (Strong Buy), Casella Waste Systems carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northwest Pipe has an expected earnings growth rate of 15.8% for the current year. The stock has appreciated 35% in a year’s time.

Tennant has a projected earnings growth rate of 29.8% for 2019. The company’s shares have rallied 32% over the past year.

Casella Waste Systems has an estimated earnings growth rate of 37.7% for the ongoing year. The company’s shares have gained 31% in the past year.

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The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report
 
Tennant Company (TNC) : Free Stock Analysis Report
 
Northwest Pipe Company (NWPX) : Free Stock Analysis Report
 
Casella Waste Systems, Inc. (CWST) : Free Stock Analysis Report
 
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