Reasons to Hold Manitowoc (MTW) Stock in Your Portfolio
The Manitowoc Company MTW is well-poised to deliver improved results backed by improving demand in its markets. Its pricing and cost-saving actions will also help negate the impacts of higher costs and supply-chain headwinds on its margins.
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.
MTW currently carries a Zacks Rank #3 (Hold).
Shares of the company have soared 84.2% in a year compared with the industry’s 68.1% 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.
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Solid Growth in Orders to Offset High Costs
Manitowoc reported adjusted earnings per share (EPS) of 75 cents in the second quarter of 2023, 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’s orders improved 29% year over year to $551 million. Backlog was $1.025 billion as of Jun 30, 2023, up 8% from the year-ago quarter.
Backed by this momentum, Manitowoc expects revenues to be in the range of $2.1 billion to $2.2 billion. The company had reported revenues of $2 billion in 2022. Adjusted EBITDA is anticipated to be between $150 million and $180 million, higher than $143 million reported in 2022.
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%. Even though the company continues to face inflated costs, its pricing actions, solid order levels and efforts to cut costs will boost earnings.
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.
Demand To Remain Strong
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, Innovation 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.
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.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are Caterpillar Inc. CAT, Astec Industries, Inc. ASTE and Eaton Corporation plc. ETN. CAT and ASTE sport a Zacks Rank #1 (Strong Buy), and ETN has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has an average trailing four-quarter earnings surprise of 18.5%. The Zacks Consensus Estimate for CAT’s 2023 earnings is pegged at $19.81 per share. The consensus estimate for 2023 earnings has moved 11.4% north in the past 60 days. Its shares have gained 69% in a year’s time.
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 47% year in the past year.
The Zacks Consensus Estimate for Eaton’s 2023 EPS is pegged at $8.80. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 3%. Shares of ETN have rallied 64% in a year.
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The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
Astec Industries, Inc. (ASTE) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
