We have issued an updated research report on Actuant Corporation ATU on Mar 30, 2015. Since its inception in 1910, the company has substantially expanded its business on a global scale, and currently shares a high brand value in the worldwide diversified machinery industry. However, as certain external issues have been troubling the company’s commercial affairs lately, investors are keen to evaluate Actuants’ second-quarter fiscal 2015 results.
Aspects to Consider
Persistent unfavorable conditions in the oil & gas markets as well as in many of Actuants’ niche marketplaces lowered its adjusted earnings by 6.7% in second-quarter fiscal 2015. Moreover, due to fluctuations in global oil & gas prices and uncertainty regarding capital investments in markets, the company anticipates its Energy Segment to perform poorly in the near future.
Actuant’s trade is highly sensitive to market headwinds like currency volatilities, which had lowered the company’s revenues in the last reported quarter. It also increased the company’s debt burden, offsetting the benefits reaped from free cash flow generation.
Actuant encounters stiff market rivalry and as a result, is forced to incur lofty innovation expenses for sustaining or gaining higher market share. However, in case the new technologies become obsolete within a short span of time, such investments might prove to be futile in the near term.
Based on these negative factors, estimate revisions for the stock have largely trended downward over the last 30 days. However, we believe Actuant’s firm commitment toward increasing its shareholders’ value will retain investors’ confidence to some extent. Furthermore, benefits reaped from success of new growth plans and product or process-based innovations are expected to offset the negative impact of headwinds, going forward.
With a market capitalization of $1.48 billion, Actuant Corporation currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include ESCO Technologies Inc. ESE, Cintas Corporation CTAS and Bemis Company, Inc. BMS. All three stocks hold a Zacks Rank #2 (Buy).
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