Manitowoc Touches New 52-Week High, What's Driving it?

Shares of Manitowoc Company, Inc. MTW scaled a new 52-week high of $9.20 on Oct 3, before ending the day a tad lower at $9.18.

Investors are optimistic on this Zacks Rank #2 (Buy) company’s focus on consolidating manufacturing footprint and reducing cost of organizational structure. The company has delivered an impressive one-year return of about 92%. Manitowoc has a market cap of $1.29 billion. Average volume of shares traded in the last three months is pegged at approximately 1.74 million. We note that the company has an average positive earnings surprise of 55.9% in the trailing four quarters.

Year to date, the stock has surged 53.5% in a year’s time, higher than the S&P 500’s gain of 17.9%. Manitowoc has also outperformed the industry’s increase of 34.6% with respect to share price movement.
 

What's Driving Manitowoc?

Recently, the company announced plans to put into effect the reverse stock split at a ratio of 1-for-4 of its shares, which will reduce the number of shares from 300 million to 75 million and increase its price. Manitowoc will utilize its solid balance sheet to allocate capital for most accretive options such as de-leveraging, organic investments, stock buybacks and external growth.

The company’s shares also received a boost following upbeat second-quarter 2017 results. Its adjusted earnings improved 67% year over year to 5 cents per share, driven by focus on consolidating manufacturing footprint and reducing cost of organizational structure. Backlog for the quarter came in at $491 million as of Jun 30, 2017, up 25% year over year. Orders of $379.5 million were up 9% from the comparable period in the last year.

Manitowoc expects revenues to decline approximately 5-7% year over year in 2017. Its previous guidance was a decline of between 8% and 10%. Adjusted EBITDA is anticipated to lie between $59 million and $69 million (previous guidance was between $41 million and $59 million).

Manitowoc Company, Inc. Price and Consensus

Manitowoc Company, Inc. Price and Consensus | Manitowoc Company, Inc. Quote

The company noted few sections of growth in specific markets within North America, such as the Permian and Eagle Ford basins. European markets continue to grow at a modest pace, underscored by residential and nonresidential project activity. Manitowoc continues to drive new programs in the aftermarket business, which contributed around 20% of revenues in the reported quarter. The company remains focused on growing this part of the business.

Manitowoc is making significant progress in the implementation of the Manitowoc Way to drive four key strategic priorities. The first part of the strategy is margin expansion. The relocation of crawler crane manufacturing in the United States is complete. The move has an estimated pre-tax cost savings of $25-$30 million. The shifting will help eliminate significant excess capacity and help drive operational efficiency. Moreover, the tower crane relocation to Portugal remains on schedule. The company also remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste.

Further, it remains firm on introducing new products and services that deliver enhanced productivity to generate greater return on investment for customers. Thirdly, it aims to focus on gaining market share through innovation. Lastly, the company will utilize the strengthened balance sheet to allocate capital for most accretive options such as de-leveraging, organic investments, stock buybacks and external growth.

Moreover, positive estimate revisions reflect optimism in the company’s potential as earnings growth is often an indication of robust prospects (and stock price gains) ahead. Estimates for Manitowoc have moved up in the past 60 days, reflecting analysts’ optimistic outlook.

The Zacks Consensus Estimate for 2017 is pegged at a loss of 14 cents per share, an improvement from the previous projection of a loss of 33 cents per share. The Zacks Consensus Estimate for 2018 has moved up to 7 cents from the prior expectation of breakeven results.

Other Stocks to Consider

Some other top-ranked stocks in the same sector include China National Materials Company Limited CASDY, KION GROUP AG KIGRY and Komatsu Ltd. KMTUY. All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

China National Materials has an expected long-term earnings growth rate of 20%.

KION GROUP has an expected long-term earnings growth rate of 7%.

Komatsu has an expected long-term earnings growth rate of 12.7%.

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Manitowoc Company, Inc. (The) (MTW) : Free Stock Analysis Report
 
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