Yahoo Finance Factors That Make Manitowoc (MTW) a Lucrative Bet Now
The Manitowoc Company MTW has been benefiting from improving demand and pricing actions. Its efforts to cut down prices have helped negate the impacts of higher costs and supply-chain headwinds. Increased spending on infrastructure in the United States and the Middle East will translate into higher order levels, going forward. Efforts to bring innovative products and grow its higher margin non-new machine sales will also aid growth.
Top Zacks Rank & Upbeat Price Performance
MTW currently sports a Zacks Rank #1 (Strong Buy).
Shares of the company have gained 37.9% in a year’s time compared with the industry’s 6% growth. The Zacks Industrial Products sector has gained 7.8% and the S&P 500 composite has risen 6.4% in the same time frame.
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Solid Q1 Earnings
Manitowoc reported revenues of $508 million in the first quarter of 2023 which improved 10.7% year over year. Adjusted earnings per share (EPS) for the quarter were 46 cents which marked a substantial improvement from the earnings of 3 cents reported in the year-ago quarter. The company beat the Zacks Consensus Estimate on both metrics. MTW has an impressive trailing four-quarter earnings surprise of 256%, on average.
Upbeat Outlook for 2023
Orders in the first quarter of 2023 increased 9% year over year to $525 million. The backlog at the end of the quarter was $1,076 million, up from $1,033 million reported in the last-year quarter. Backed by this momentum, Manitowoc expects revenues of $2-$2.1 billion for 2023. The company reported revenues of $2.03 billion in 2022. Adjusted EPS is expected between 35 cents and $1.15, compared with $1.06 in 2022.
Upward Revision in Estimates
The Zacks Consensus Estimate for MTW’s earnings for 2023 has moved up 29% over the past 60 days and is currently pegged at $1.10 per share. The consensus mark for 2024 earnings has also seen a northward revision of 11% to $1.27 per share.
Demand Prospects Hold Promise
In North America, demand from residential and non-residential construction is driving demand for Manitowoc’s equipment. Due to the U.S. Infrastructure Investment and Jobs Act, the rising investment in roads, bridges, airports and waterways represents a massive opportunity. The company expects demand in the Middle East to be robust in the upcoming quarters. Qatar and Kuwait are also showing signs of growth. This bodes well for Manitowoc. Further, the pressing need to replace the aging crane fleet will support the demand for Manitowoc’s equipment.
Efforts to Grow Aftermarket Sales to Reap Benefits
To achieve sustainable growth in both sales and earnings, Manitowoc is now placing greater emphasis on growing non-new machine sales (aftermarket parts, services, rentals, used cranes, and digital solutions). Growing this part of the business will provide it with more annuity-like revenue streams that will help lessen the impact of the crane market cyclicality. Also, this business carries higher margin rates than new crane sales. The company estimates that non-new machine revenues were $567 million in the trailing twelve months ended Mar 31, 2023, and it expects to take this figure to $675 million by 2026.
Manitowoc acquired the crane business of H&E Equipment Services, Inc HEES in October 2021 to expand its ability to provide rentals, new sales, used sales, aftermarket parts, and service to a variety of end market customers. H&E’s crane business operates with 11 full-service branch locations. The purchase of H&E’s crane business is an important step in its journey to grow the less cyclical part of its business.
Solid Balance Sheet Bodes Well
As of Mar 31, 2023, Manitowoc had a total liquidity of $296 million. The company’s total debt-to-total capital ratio was at 0.41 as of Mar 31, 2023. The total debt-to-total capital ratio has gone down considerably over the years from 0.62 as of 2015. The company remains focused on cash preservation and balance sheet management while funding critical programs for future growth.
MTW continues to evaluate acquisition opportunities to accelerate product development programs in its all-terrain product line. Manitowoc’s innovation pipeline remains robust. Focus on innovation will continue to aid it in leading the industry by providing differentiated products that add value to customers.
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Hubbell Incorporated HUBB and Pentair plc PNR. HUBB sports a Zacks Rank of 1 at present and PNR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hubbell has an average trailing four-quarter earnings surprise of 21%. The Zacks Consensus Estimate for HUBB’s fiscal 2023 earnings is pegged at $13.81 per share. The consensus estimate for 2023 earnings has moved north by 22.5% in the past 60 days. Its shares gained 45.4% in the last year.
The Zacks Consensus Estimate for Pentair’s 2023 EPS is pegged at $3.66, up 3% in the past 60 days. It has a trailing four-quarter average earnings surprise of 7.2%. PNR gained 14.9% in the last year.
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The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report
Pentair plc (PNR) : Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
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