On Jun 6, we issued an updated research report on The Manitowoc Company, Inc. MTW. The company put up an impressive performance in the first quarter of 2019. Product innovation and order strength in the United States will continue to be growth drivers for the company. Also, its focus on pricing actions will help counter input cost inflation.
Let's analyze the factors in detail.
Stellar Q1 Results: Manitowoc delivered first-quarter 2019 adjusted earnings per share of 8 cents, beating the Zacks Consensus Estimate of a loss of 2 cents by a wide margin. Further, the company reversed its prior-year quarter’s loss of 12 cents per share. Revenues increased 8.3% year over year to $418 million. The top-line figure also surpassed the Zacks Consensus Estimate of $394 million.
Solid Order Growth in the United States Instils Optimism
In the March-end quarter, Manitowoc’s revenues increased year over year, driven by higher crane shipments in the Americas, along with favorable price realization. In the Americas, commercial construction and energy end markets have been spurring demand. The North American oil and gas environment continues to improve, with investment in upstream well completions, continuing to drive crane utilization and replacement demand.
The company has updated its revenue guidance for 2019 to $1.90-$1.97 billion. Compared with revenues of $1.85 billion in 2018, the mid-point of the guidance reflects year-over-year growth of 6.6%. Manitowoc delivered its eight consecutive quarter of year-over-year improvement in its adjusted EBITDA in the first quarter on improved aftermarket margins, favorable mix, global pricing initiatives and cost reductions. It also issued its EBITDA guidance at $130-$150 million for the current year. The mid-point of the guidance projects year-over-year jump of 27%. It also projects capital expenditure of $35 million for the year.
Pricing Actions & Cost Control to Negate Inflation
The company continues to execute the strategy to cover cost inflation through pricing actions. Further, it remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste. It has also been taking aggressive steps to support supply-chain partners to ensure timely delivery of components.
Innovation — A Key Catalyst
Manitowoc’s after-market business continues to perform well on higher-margin parts and services. The company’s focus on innovation will continue to aid in leading the industry by providing differentiated products that add value to customers. It has introduced the tower crane at Bauma, China, called the MCT 565 for the Asia market. It also unveiled GMK 5250 XL, a new 250 ton all-terrain crane and Potain MDT 809. Following the encouraging response, the company is now developing an entire range of tower cranes in China for the Asia market, which will enable it to grow organically in the region. Manitowoc also introduced six new cranes at the Bauma Trade Show in Munich, Germany, this April.
Positive Growth Projections
The Zacks Consensus Estimate for the ongoing year’s earnings is pinned at $1.39 billion, projecting year-over-year growth of 117.2%. The same for 2020 is pegged at $1.77, calling for year-over-year growth of 27.9%.
Share Price Performance
Manitowoc’s stock has declined around 46.3% over the past year compared to the industry’s loss of 19.8%.
Zacks Rank & Other Stocks to Consider
Manitowoc currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and Harsco Corporation HSC, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DMC Global has an estimated earnings growth rate of 83.5% for the ongoing year. The company’s shares have surged 59.1%, in the past year.
Lawson Products has an expected earnings growth rate of 24.5% for the current year. The stock has appreciated 41.1% in a year’s time.
Harsco has a projected earnings growth rate of 9.1% for 2019. The company’s shares have gained 1.2%, over the past year.
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