Why is Manitowoc (MTW) Down 2.7% Since its Last Earnings Report?

It has been about a month since the last earnings report for The Manitowoc Company, Inc. MTW. Shares have lost about 2.7% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is MTW due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Manitowoc's Loss Narrows in Q1, Revenues Top Estimates

 

Manitowoc posted first-quarter 2018 adjusted loss per share of 12 cents compared to the prior-year quarter’s loss of 69 cents per share. Results came in narrower than the Zacks Consensus Estimate of a loss of 23 cents per share.

 

Including special items, the company posted loss of 28 cents in the reported quarter. It had reported a loss of $1.03 per share in the year-ago quarter.

 

Manitowoc witnessed a 26% year-over-year improvement in sales to $386 million in the first quarter, driven by improved crane shipments across all regions. Revenues also beat the Zacks Consensus Estimate of $374 million.

 

Operational Update

 

Cost of sales jumped 25% to $318 million in the reported quarter from $254 million in the prior-year quarter. Gross profit climbed 32% year over year to $68 million. Gross margin expanded 70 basis points to 17.7%.

 

Engineering, selling and administrative expenses dipped 1.6% year over year to $60 million. Adjusted EBITDA was $17 million in the reported quarter compared to $1 million in the prior-year quarter. Adjusted operating income was $8 million in the reported quarter.

 

Backlog

 

Backlog in the first quarter came in at $757 million, up 49% from first-quarter 2017. First-quarter orders were at $536 million, a 10% increase from the prior-year quarter.

 

Financial Updates

 

Manitowoc reported cash and cash equivalents of $99 million at the end of the first quarter, down from $123 million recorded at the end of 2017. Long-term debt was $266 million as of Mar 31, 2018, compared with $267 million as of Dec 31, 2017.

 

The company used $173 million of cash in operating activities during the quarter compared with cash usage of $109 million posted in the prior-year period.

 

Guidance

 

Manitowoc revised its full-year 2018 financial guidance. It expects that revenues will be approximately $1.78-$1.85 billion for the full year. The company raised 2018 adjusted EBITDA guidance to $100-$120 million from the prior view of $96-$116 million. However, Manitowoc reaffirmed its outlook for depreciation of around $39 million and capital expenditures at roughly $25-$30 million.

 

Manitowoc is poised to gain from the transformation into a leaner and profitable crane company. However, materials inflation and supply-chain challenges remain concerns. Also, foreign currency exchange rates are putting pressure on its margins.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to one lower.

The Manitowoc Company, Inc. Price and Consensus

 

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

VGM Scores

At this time, MTW has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, MTW has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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