We issued an updated research report on Altra Industrial Motion Corp. AIMC on Nov 30, 2015. The company specializes in manufacture and distribution of a diverse range of mechanical power transmission components.
Altra Industrial Motion has performed well in the past few quarters, and its long-term prospects also appear solid with earnings anticipated to grow 5% over the next half-decade. The company stands to benefit from its diversified product portfolio and large customer base in the energy, general industrial, material handling, metals, mining, special machinery, transportation, and turf and garden industries. Based on this, the company expects to earn $1.5 billion in revenues from its power transmission business in the long run.
In addition, Altra Industrial Motion is making concerted efforts to check expenses and favorably align its businesses. The company’s restructuring and cost-saving strategies, expected to be completed in 2018, will start yielding benefits from the second half of 2015.
Despite these positives, Altra Industrial Motion is, however, exposed to certain headwinds that have restricted its growth momentum in the near term. While geographical diversification raise risks in the form of unfavorable foreign currency movements, uncertainty in global economy has led to difficult operating conditions in many end markets.
For 2015, Altra Industrial Motion anticipates weakness to persist in oil & gas, agriculture, and mining & metals end markets. Also, adverse foreign currency movements might hurt results. The company has lowered its sales and earnings forecasts to $745−$755 million and $1.60−$1.68 per share from the respective prior projections of $760−$780 million and $1.60−$1.75 per share.
With a market capitalization of $729 million, Altra Industrial Motion presently carries a Zacks Rank #3 (Hold). The above-mentioned positives and negatives justify the stock’s investment value. On the other hand, some companies in the same sector continue to perform better than Altra Industrial Motion, having gained high investment rankings. These stocks include Encore Wire Corp. WIRE, iRobot Corporation IRBT and John Bean Technologies Corporation JBT. While Encore Wire sports a Zacks Rank #1 (Strong Buy), both iRobot Corporation and John Bean Technologies carry a Zacks Rank #2 (Buy).
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