Alamo Group, Inc. ALG reported better-than-expected fourth-quarter 2017 results. Per the company, this stellar performance was backed by improved agricultural business, strong snow removing products’ demand, increased vacuum truck equipment rentals and non-governmental sales, stronger European business and favorable foreign currency translation impact.
Earnings and Revenues
In the reported quarter, adjusted earnings came in at $1.10 per share higher than the Zacks Consensus Estimate of 98 cents. The bottom line also surpassed the year-ago tally of 81 cents per share.
In 2017, adjusted earnings per share of $4.63, surpassed the Zacks Consensus Estimate of $4.49. The reported figure also exceeded the year-ago tally of $3.62 per share.
Net sales in the fourth quarter were $243.3 million, which outpaced the consensus mark of $229 million. Moreover, the top line improved 18.4% year over year.
In 2017, net sales totaled $912.4 million and exceeded the Zacks Consensus Estimate of $898.5 million. The top line improved 8% year over year.
Segmental Breakup
Industrial revenues increased 20.2% to $147.2 million in the fourth quarter.
Meanwhile, agricultural revenues came in at $56.5 million, up 15.5%.
Also, European revenues improved 16% year over year to $39.6 million.
Alamo Group, Inc. Price, Consensus and EPS Surprise
Alamo Group, Inc. Price, Consensus and EPS Surprise | Alamo Group, Inc. Quote
Other Financial Details
Cost of sales in the quarter under review was $182.3 million, up 15.7% year over year. Gross margin expanded 25% to 170 basis points (bps) year over year.
Total operating expenses were $40 million, up 12.3% year over year. Also, operating margin in the quarter improved 8.6% to 260 bps year over year.
Gross margin for 2017 was 25.7%, up 140 bps year over year. While, operating margin for 2017 was 9.7%, up 170 bps year over year.
Exiting fourth-quarter 2017, Alamo Group’s cash and cash equivalents totaled $25.4 million, up from $16.8 million recorded in 2016-end. Long-term debt was $60 million compared with $70 million as of Dec 31, 2016.
Outlook
This Zacks Rank #3 (Hold) stock perceives that stronger sales, acquisition benefits and the new corporate tax law will boost its profitability in the quarters ahead. However, increased cost of inputs such as steel and moderate inflation in wage rates (due to tighter labor availability) might dent near-term growth.
Stocks to Consider
Some better-ranked stocks within the Zacks Industrial Products sector are listed below:
Applied Industrial Technologies, Inc. AIT sports a Zacks Rank #1 (Strong Buy). The company has pulled off a positive average earnings surprise of 10.97% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Acco Brands Corporation ACCO carries a Zacks Rank #2 (Buy). The company has delivered a positive average earnings surprise of 82.49% in the last four quarters.
Allegion PLC ALLE has a Zacks Rank of 2. The stock has pulled off a positive average earnings surprise of 8.72% in the trailing four quarters.
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