John Bean Technologies Corporation JBT looks promising at the moment on stellar second-quarter 2019 earnings and encouraging outlook for 2019. Further, focus on acquisitions, developing innovative products and expanding recurring revenue base is likely to drive results. We are positive on its prospects and believe that this is the right time to add the stock to your portfolio as it is poised to retain the momentum.
John Bean Technologies’ shares have gained 35% year to date, outperforming the industry’s growth of 18.3%.
The company currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities.
Let's delve deeper and analyze the factors that make John Bean Technologies stock a compelling investment option at the moment.
Sound Q2 Results: The company’s second-quarter 2019 adjusted earnings per share of $1.42, improved 12% from the prior-year quarter. Revenues of $493 million also rose 0.4% year over year. The company beat the Zacks Consensus Estimate on both the metrics.
Upbeat Guidance: For 2019, John Bean Technologies’ earnings per share guidance is at $4.70-$4.90. Compared with earnings per share of $4.28 in 2018, the mid-point of the guidance range reflects growth of 12%. The company continues to expect organic growth of 4-5%. Acquisitions are now anticipated to contribute around 7% to growth.
Positive Earnings Surprise History: John Bean Technologies outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive earnings surprise of 28.79%.
Estimates Northbound: Earnings estimate revisions have the most impact on stock prices. The Zacks Consensus Estimate for John Bean Technologies’ current-year and the next-year earnings has moved up around 7% over the past 90 days, reflecting analysts’ confidence in the stock.
Positive Earnings Growth Projections: The Zacks Consensus Estimate for the company’s earnings for the ongoing year is currently pegged at $4.84, suggesting year-over-year growth of 13.08%. The same for 2020 is pinned at $5.37, indicating year-over-year of 10.95%. The stock also has long-term expected earnings per share growth rate of 7.3%, higher than the industry’s growth rate of 5.5%.
Return on Equity (ROE): The company’s trailing 12-month ROE of 33.7% reinforces growth potential. The company's ROE is much higher than the industry’s 25.7%, highlighting the company's tactical efficiency in utilizing shareholders' funds.
Growth Drivers in Place
John Bean Technologies’ Elevate plan is likely to drive persistent growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance their yield and productivity. The company is capitalizing on extensive installed base to expand recurring revenue (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. This portion of the business has been seeing a CAGR of 9% over the past three years. In fact, it has further room for growth and will contribute to margins.
John Bean Technologies has a strategic acquisition program focused on companies that add complementary products. Further, its ongoing restructuring plan will help improve effectiveness and productivity in all business units.
The company is poised to perform well in the long run, courtesy of growing middle class, increasing protein and value-added food and beverage consumption globally. Rising global population and disposable incomes has led to a shift in dietary habits, primarily increased protein consumption. This is evident in emerging markets. In developed markets, ready-to-eat and convenient food consumption will be a key catalyst. Additionally, consumers are moving away from traditional sodas and other beverages to fresh juice.
The AeroTech segment will continue to perform well due to heavy airport infrastructure spending. With air travel projected to double over the next 20 years, the company can capitalize on this demand. Moreover, labor constraints are leading to increased automation adoption among customers. Food manufacturing, particularly, has 30% lower compensation rates and harsher work environment compared to traditional manufacturing. This in turn will boost the company’s revenues.
Other Stocks to Consider
Some other top-ranked in the Industrial Products sector are Albany International Corporation AIN, AGCO Corporation AGCO and UFP Technologies, Inc. UFPT While Albany International sports a Zacks Rank #1, AGCO Corp and UFP Technologies carry a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albany International has an estimated earnings growth rate of 33.85% for 2019. The company’s shares have rallied 40.1% year to date.
AGCO Corp has a projected earnings growth rate of 11.2% for the current year. The stock has gained 18.4% so far this year.
UFP Technologies has an expected earnings growth rate of 8.10% for the ongoing year. The stock has appreciated 31.5% in the year-to-date period.
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