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Strong Order Levels to Aid Manitowoc (MTW) Amid Inflated Costs

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·5 min read
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The Manitowoc Company MTW has been witnessing strong growth in order and backlog levels, which will continue to bolster its top-line performance in the forthcoming quarters. Its cost-saving actions will aid the company counter the impact of the ongoing inflationary pressures and supply chain challenges. The company's market-leading products and focus on innovation provide it with a competitive edge. Investment in growth projects and acquisitions will drive growth.

Solid Demand and Order Levels Hold Promise

Over the last four quarters, Manitowoc has been reporting improved order levels and backlog, indicating strong demand in its end markets. Total orders in 2021 increased 43% year over year to $2,167 million and the backlog as of the end of the year stood at $1.01 billion. The backlog was up 86% year over year — the highest seen in a decade.

Strong demand, as well as contributions from recent acquisitions, will aid the company's top-line growth in 2022. Manitowoc anticipates revenues of $2-$2.2 billion for fiscal 2022. The mid-point of the range indicates growth of 22% from revenues of $1.72 billion reported in 2021. Adjusted EBITDA is anticipated to be between $130 million and $160 million. The mid-point of the range indicates growth of 25% from adjusted EBITDA of $116 million in 2021. Adjusted EPS is expected between 65 cents and $1.35, which suggests year-over-year growth of 16% at the mid-point.

The Zacks Consensus Estimate for MTW's fiscal 2022 revenues is currently pegged at $2.08 billion, suggesting growth of 32.6% year over year. The consensus mark for earnings stands at $1.14, indicating growth of 32.6% from the prior-year reported figure.

Strategies to Grow Business in Place

The company's focus on innovation will continue to aid it in leading the industry by providing differentiated products that add value to customers. Its aftermarket business continues to perform well, and the company is taking steps to expand the business. In sync with this, Manitowoc acquired the crane business of H&E Equipment Services HEES.

H&E Equipment Services' crane business operates with 11 full-service branch locations. This purchase is an important step in Manitowoc's journey to grow the less cyclical part of its business. The company acquired all the assets of Aspen Equipment Company, which will expand its presence in Nebraska, Iowa and Minnesota and provide after-sales services to a diversified end market. Aspen's aftermarket business will supplement the buyout of the crane business of H&E Equipment Services.

The company remains focused on cash preservation and balance sheet management while funding critical programs for future growth. It continues to evaluate acquisition opportunities to accelerate product development programs in its all-terrain product line. Manitowoc is scaling up its Chinese tower crane business and has launched six new crane models, which have received positive customer feedback. Notably, the tower crane market in China is the largest tower crane market in the world. The company invested $15 million in its tower crane rental fleet in Europe, which helped it gain market share in Germany and win some strategic orders with key accounts. In all-terrain cranes, the company has new models lined up for launch at Bauma, the world's leading construction machinery trade fair in 2022.

Pricing, Cost Control Actions to Offset Inflated Costs

The company is facing higher steel, logistics, and transportation costs (both ocean and land freight). Supply chain shortages and skilled labor constraints remain headwinds. The semiconductor chip shortage has created significant issues throughout its supply base. The company has been executing pricing actions and cutting costs and remains focused on increasing efficiency and productivity. These efforts will help it counter the inflationary pressures.

Price Performance

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In the past year, Manitowoc's shares have slumped 32.5% compared with the industry's decline of 5.4%.

Zacks Rank and Stocks to Consider

Manitowoc currently sports a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Titan International TWI and AGCO Corporation AGCO. While TWI flaunts a Zacks Rank #1 (Strong Buy), AGCO carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Titan International has an expected earnings growth rate of 36.5% for 2022. The Zacks Consensus Estimate for the current year's earnings has moved up 51% in the past 60 days.

TWI pulled off a trailing four-quarter earnings surprise of 47.6%, on average. TWI's shares have gained 24% year to date.

AGCO Corp has an estimated earnings growth rate of 12.1% for 2022. In the past 60 days, the Zacks Consensus Estimate for the year's earnings has been revised upward by 11%.

AGCO has a trailing four-quarter earnings surprise of 56.6%, on average. So far this year, the company's shares have surged 20%.

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The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report

AGCO Corporation (AGCO) : Free Stock Analysis Report

Titan International, Inc. (TWI) : Free Stock Analysis Report

H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report

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