Altra Industrial Motion Corp. AIMC can be a good investment option in the manufacturing industries. The company has strong fundamentals and growth prospects. Its earnings estimates too have been revised upward, reflecting bullish sentiments for the stock.
The company is based in Braintree, MA, and has a market capitalization of $2.5 billion. It belongs to the Zacks Manufacturing – General Industrial industry, which is part of the broader Zacks Industrial Products sector.
The company presently sports a Zacks Rank #1 (Strong Buy).
Below we discussed why it is worth investing in Altra Industrial.
Diversification Benefits: The company’s presence in multiple end markets have been benefiting it over time. Amidst the pandemic-related problems in transportation, aerospace & defense, distribution, and other end markets, the company benefited from gains in agriculture, renewable energy, specialty machinery and factory automation markets in the second quarter of 2020.
Further, it believes that growth opportunities will be healthy in robotics, factory automation, medical equipment and food processing in the post-pandemic period.
Liquidity and Deleverage: The company’s liquidity position places it well to deal with the financial obligations, especially in the present difficult environment caused by the pandemic. Its cash balance was $220 million at the end of second-quarter 2020, while available liquidity under its credit line was $295 million. Also, its free cash flow in the second quarter was $64.4 million, up 38% year over year.
In the quarters ahead, the company believes that restrictions on capital expenditure and lowering of quarterly dividend rate in April 2020 will help in saving some resources.
Also, deleveraging balance sheet remains a priority for the company. Repayments of term loans amounting to $24 million and borrowings under the revolving credit facility of $100 million were made in the second quarter of 2020.
Other Tailwinds: In the pandemic period, the company is committed toward providing services to customers, the safety of its workers and maintaining a healthy supply chain. Also, cost-reduction measures are being taken to tackle the financial pressure.
In addition, the company’s pricing actions, solid product offerings and cross-selling programs are poised to benefits in the quarters ahead. Also, its e-commerce capabilities, working capital improvement program, buyouts and technological expertise might aid.
Financial Projections: The company anticipates non-GAAP earnings of $2.05-$2.30 in 2020, reflecting an increase from the previous expectation of $1.67-$2.03 per share. Further, it expects revenues of $1,580-$1,640 million in 2020. Notably, the company earlier predicted revenues of $1,540-$1,620 million.
Price and Earnings Estimate Trend: Market sentiments have been positive for Chart Industries for quite some time now. In the past three months, the company’s shares have gained 34.1% as compared with the industry’s growth of 20.5%.
Also, the company’s earnings estimates have been revised upward in the past 30 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at 46 cents for the third quarter of 2020, up 15% from the 30-day-ago figure.
In addition, the consensus estimate for 2020 has been increased by 15.7% to $2.21 in the past 30 days, while that for 2021 has been raised by 8% to $2.70.
Altra Industrial Motion Corp. Price and Consensus
Altra Industrial Motion Corp. price-consensus-chart | Altra Industrial Motion Corp. Quote
Other Key Picks
Three other top-ranked stocks in the industry are Chart Industries, Inc. GTLS, Tennant Company TNC and Graco Inc. GGG. While both Chart Industries and Tennant currently sport a Zacks Rank #1, Graco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 46.51% for Chart Industries, 380.00% for Tennant and 37.04% for Graco.
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