Shares of Manitowoc Company, Inc. (MTW) reached a new 52-week high of $21.50 on Friday, May 31, 2013. The new high was primarily driven by an improved first quarter performance despite weak demand conditions in the equipment market.
This diversified capital goods manufacturer has delivered a robust one-year return of about 111.7% and year-to-date return of about 33.99%, outperforming the S&P 500. Average volume of shares traded over the last three months was approximately 2.6 million shares.
Manitowoc has delivered positive earnings surprises in two of the past four quarters, but the average surprise is -9.15%. This Zacks Rank #5 (Strong Sell) stock has a market cap of $2.81 billion and a long-term expected earnings growth rate of 17.5%.
Manitowoc’s Strengths
Crane demand is expected to increase significantly, aided by the new highway bill and a turnaround in the construction sector. Manitowoc’s Foodservice equipment segment’s result is dependent on McDonald's Corp. (MCD) and other restaurant chains. Once the economy improves, expansion of these restaurants will provide Manitowoc the opportunity to sell its ovens, ice machines, and other innovative products.
Manitowoc’s diverse product offerings, leading technologies and geographic reach position it well for long-term growth. The company will benefit from significant investments made to upgrade its global manufacturing network, improve operating efficiencies, and product innovation.
Improved 1Q13 Earnings, Outlook
Manitowoc reported first-quarter 2013 adjusted earnings of 9 cents per share, an improvement from the break-even results in the prior-year quarter. Performance in the Crane segment was driven by continued growth in the American region, as well as higher demand in emerging markets. The Foodservice Equipment segment was benefitted by sales of new products and growth across all geographies. Backlog in the Crane segment increased 3% sequentially to $776 million as of the first quarter end.
Manitowoc’s first quarter was praiseworthy considering that construction and mining equipment behemoth Caterpillar, Inc. (CAT) reported a 17% decline in revenues, 45% fall in earnings per share and a decline in backlog. Manitowoc reported increase in both revenues and earnings despite weak demand conditions in the equipment market.
For 2013, Manitowoc maintains its forecast for crane revenues to grow in high single-digit, while Foodservice revenues are revised to grow in mid single-digit from the previous guidance of low single-digit. The company retains expectations of a high single-digit improvement in operating margins in the crane segment and mid-teens gains in the Foodservice segment.
Capital expenditure projection also remains at $100 million for the year. The company also reaffirmed depreciation and amortization outlook, which will be $115 million for 2013. Interest expenses are expected to be $125 million while debt reduction has been targeted to exceed $200 million. The Zacks Consensus Estimate for 2013 is currently at $1.14 per share, reflecting a 45.67% year-over-year growth.
Other Stocks to Consider
Other stock in the industry that is currently performing well and have a good visibility is H&E Equipment Services Inc. (HEES) with a Zacks Rank #2 (Buy).
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