Positive reactions to Altra Industrial Motion Corp.'s (AIMC) upbeat fourth-quarter 2013 results sent its shares spiraling up to a new 52-week high of $36.18 during the trading session on Feb 26. The new 52-week high represents an increase over $35.95 reached on Feb 20.
Altra Industrial Motion closed the trading on Feb 26 at $35.64. The trading volume for the session was 0.13 million shares. This Zacks Rank #2 (Buy) industrial electrical equipment maker provided a solid year-to-date return of 44.1% and exhibits further strong upside potential for the quarters ahead. Positive revisions in earnings estimates in the last 7 days and expected earnings growth of 17.4% in the next 5 years substantiates the bright outlook.
Growth Drivers
Altra Industrial Motion posted better-than-expected top- and bottom-line results in fourth-quarter 2013. Earnings per share in the quarter grew 5.6% year over year to 38 cents and also surpassed the Zacks Consensus Estimate by 2.7%.
Net sales increased 1.9% to $180.5 million, beating the Zacks Consensus Estimate of $175.0 million. The top-line improvement was driven by solid inorganic growth in the quarter. Acquisition of Svendborg Brakes A/S and S.B. Patent Holding ApS (Svendborg) was completed in the quarter. Svendborg is a leading global manufacturer of premium quality caliper brakes.
Future growth prospects are bright for Altra Industrial Motion. The company anticipates earnings accretion from the Svendborg acquisition in 2014. Revenues are anticipated to be within $800–$825 million range while earnings are expected in the range of $1.85–$2.00 per share. The top- and bottom-line guidance reflects an improvement over $722 million revenues and earnings per share of $1.64 recorded in 2013.
Stellar fourth-quarter 2013 results and an impressive guidance for 2014 have driven Altra Industrial Motion’s share price up by 5.0% since Feb 19 and have led to positive revisions in earnings estimates, discussed below.
Estimate Revisions Show Potency
Over the last 7 days, the Zacks Consensus Estimate for Altra Industrial Motion has increased by 0.5% to $2.00 for 2014 and by 4.1% to $2.29 for 2015. These estimates represent year-over-year growth rates of 21.8% for 2014 and 14.4% for 2015.
Other stocks worth a look in the same industry include DXP Enterprises, Inc. (DXPE), Kadant Inc. (KAI) and Middleby Corp. (MIDD). While DXP Enterprises and Kadant hold a Zacks Rank #1 (Strong Buy), Middleby Corporation carries a Zacks Rank #2.
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