Reasons to Add Manitowoc (MTW) Stock to Your Portfolio
The Manitowoc Company MTW has been delivering improved results in the past few quarters, benefiting from improving demand. Its pricing actions have also helped negate the impacts of higher costs and supply-chain headwinds.
MTW continues to accelerate its investment in product development and innovation, strengthening its aftermarket business, which will drive growth. Increased spending on infrastructure in the United States is also expected to be a major catalyst going forward.
Top Zacks Rank & Upbeat Price Performance
MTW currently carries a Zacks Rank #2 (Buy).
Shares of the company have soared 44.8% in a year compared with the industry’s 34.8% increase. The Zacks Industrial Products sector has grown 5.9% and the S&P 500 composite has risen 4.5% in the same time frame.
Image Source: Zacks Investment Research
Guidance Supported by Solid Growth in Orders
Manitowoc’s adjusted earnings per share (EPS) for the second quarter of 2023 were 75 cents, which marked a substantial improvement from the EPS of 21 cents reported in the year-ago quarter. The company also beat the Zacks Consensus Estimate of EPS of 25 cents by a solid margin of 200%. MTW has an impressive trailing four-quarter earnings surprise of 317%, on average.
The company witnessed a 29% improvement in orders in the quarter to $551 million. Backlog was $1.025 billion as of Jun 30, 2023, 8% higher than the year-ago quarter.
Backed by this momentum, Manitowoc expects revenues to be $2.1 billion to $2.2 billion, higher the previously stated range of $2-$2.1 billion. Adjusted EBITDA is anticipated to be between $150 million and $180 million, higher than the previous expectation of between $130 million and $160 million. Adjusted EPS is expected to be between $1.10 and $1.70 in 2023. The midpoint of the guidance indicates year-over-year growth of 32%. The company had earlier provided a guidance of 35 cents to $1.15 per share.
Our model’s projection for the company’s 2023 revenues is $2.16 billion, which suggests year-over-year growth of 6%. The projected EPS is $1.44, indicating 36% year-over-year growth.
Positive Estimate Revisions
The Zacks Consensus Estimate for MTW’s earnings for 2023 has moved up 32% over the past 30 days. The consensus mark for 2024 earnings has also seen a northward revision of 23% to $1.67 per share.
Upbeat Demand Prospects
In North America, demand from residential and non-residential construction is driving demand for Manitowoc’s equipment. Due to the U.S. Infrastructure Investment and Jobs Act, the rising investment in roads, bridges, airports and waterways represents a massive opportunity. The company expects demand in the Middle East to be robust in the upcoming quarters. Qatar and Kuwait are also showing signs of growth. This bodes well for Manitowoc. Further, the need to replace the aging crane fleet will support the demand for Manitowoc’s equipment.
Aftermarket Sales to Aid Growth
To achieve sustainable growth in both sales and earnings, Manitowoc is now placing greater emphasis on growing non-new machine sales (aftermarket parts, services, rentals, used cranes, and digital solutions). Growing this part of the business will provide it with more annuity-like revenue streams, which will help lessen the impact of the crane market cyclicality.
This business also carries higher margin rates than new crane sales. Non-new machine revenues were $579 million in the trailing twelve months ended Jun 30, 2023, and it expects to take this figure to $675 million by 2026.
Investing in Acquisitions, Product Innovation
As of Jun 30, 2023, Manitowoc had a total liquidity of $255 million. The company’s total debt-to-total capital ratio was 0.40 as of Jun 30, 2023. The total debt-to-total capital ratio has gone down considerably over the years from 0.62 as of 2015. The company remains focused on cash preservation and balance sheet management while funding critical programs for growth.
MTW continues to evaluate acquisition opportunities to accelerate product development programs in its all-terrain product line. 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 its customers.
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. WOR, Astec Industries, Inc. ASTE and A. O. Smith Corporation AOS. WOR and ASTE sport a Zacks Rank #1 (Strong Buy) at present, and AOS has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved 22.6% north in the past 60 days. Its shares have gained 33.5% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $2.81 per share. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. ASTE’s shares have gained 22.8% in the last year.
The Zacks Consensus Estimate for A. O. Smith’s 2023 EPS is pegged at $3.57. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 10.5%. AOS has gained 11.1% in the last year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report
Worthington Industries, Inc. (WOR) : Free Stock Analysis Report
Astec Industries, Inc. (ASTE) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
