Yahoo Finance How Has Joy Global’s Stock Fared ahead of Its 1Q16 Earnings?
What Can Investors Expect from Joy Global's 1Q16 Earnings?
Joy Global’s stock performance
Joy Global’s (JOY) stock has been on a downward trend since January 2015. The stock started falling at the beginning of 2015. This was due to oversupply in commodity markets and capex cuts by mining customers. However, the stock seems to be rising since the beginning of January 2016. Joy Global has fallen ~78% since February 2015. In comparison, the Energy Select Sector SPDR Fund (XLE) has fallen ~28% year-over-year.
What impacted Joy Global’s business?
The mining industry and Joy Global have enjoyed unparalleled success on the back of the growing Chinese economy from 2005 to 2015. After the slowdown in China, the industry was hit by a reduced mining capex and an oversupplied commodities market. Commodity prices as a whole have been falling.
In 2015, Joy Global’s product sales fell to 26% of the total revenue. Its service sales were 74% of the total revenue. The increasing divide between the product segment and service segment is an area of concern. New equipment sales not only provide additional revenue, but they allow Joy Global to continuously update its product line by investing more in research and development.
As a result of the market conditions, the revenue fell 16% from $3.78 billion in 2014 to $3.17 billion in 2015. Combined with impairment costs of $1.34 billion, Joy Global took a net loss of $1.18 billion for 2015. The backlog is ~25% of its level four years ago. The orders fell 25% compared to fiscal 2014.
Caterpillar (CAT), Terex (TEX), and Komatsu (KMTUY) are some of the major companies in the mining industry.
Joy Global is part of the SmallCao Earning Fund ETF (EES). It accounts for 0.70% of the total holdings. Investors in EES could benefit if Joy Global delivers operational excellence in a weak and volatile market. EP Energy Corp Class A (EPE) and Atwood Oceanics (ATW) are also among EES’s top ten holdings.
Browse this series on Market Realist:
