Altra Holdings Inc. (AIMC) reached its 52-week high on January 4, as shares have been gaining since the company reported third-quarter results in October. With a 20% increase in its dividend and rising earnings estimates, this Zacks #1 Rank (Strong Buy) supplier of electromechanical power transmission and motion control products seems set for further momentum.
Altra Beats Earnings Estimates in Q3
On October 25, Altra Holdings reported third quarter earnings per share (EPS) of 34 cents, beating the Zacks Consensus Estimate by 9.7%.
Net sales decreased 1.9% year over year to $174.5 million, hurt by lower sales in Europe and a 320-basis point negative foreign currency translation. The result also missed the Zacks Consensus Estimate. However, the Lamiflex acquisition added 0.8% to the top line.
The company currently forecasts sales between $720 million and $735 million for the year, representing a 6.7% to 8.9% advance on a year-over-year basis. The increased guidance reflects positive initiatives to improve profitability in the upcoming quarters. Management plans to reduce headcount, limit its discretionary spending, move certain product line manufacturing to low-cost countries and increase prices in certain end markets.
The non-GAAP adjusted EPS is expected between $1.35 and $1.45 for 2012.
Earnings Estimates
In the last 60 days, the Zacks Consensus Estimate for fiscal 2012 has remained $1.41 per share. For fiscal 2013 however, the Zacks Consensus Estimate is up 4.6% to $1.59. Earnings are expected to rise 1.88% for fiscal 2012 and 12.9% for fiscal 2013.
Reasonable Valuation
Altra Holdings has a P/E of 16.20x, which is at a premium to the peer group average of 14.20x. However, Altra’s P/S of 0.85x and PEG of 0.62x are at a discount to the peer group averages of 0.95 and 1.01, respectively. Furthermore, ROE of 16.6% is above the peer group average of 16.2%, therefore the valuation looks reasonable.
Altra shares have appreciated 40.04% in the past 6 months compared to an 8.3% increase for the S&P 500. The stock is currently trading above its 50-day and 200-day moving averages of $20.07 and $17.98, respectively.
Altra Holdings designs, produces and markets a range of mechanical power transmission and motion control products worldwide. The company provides industrial clutches and brakes for elevators, forklifts, lawn mowers, oil well draw works, punch presses and conveyors; open and enclosed gearing products for conveyors, ethanol mixers, packaging machinery, and metal processing equipment; and engineered couplings for extruders, turbines, steel strip mills, and pumps. The company currently has 3,466 employees and a market cap of $617.9 billion.
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