Joy Global

Company Description

Joy Global is a pure play on the global mining sector. It is a leader in manufacturing, servicing, and distributing equipment for underground mining through Joy Mining Machinery and surface mining through P&H Mining Equipment. Joy Global’s products are used primarily in the extraction of underground coal. Coal mining accounts for roughly 70% of Joy Global’s annual revenues.

Emerging Markets Driving Growth

Much of Joy Global’s growth will come from China, India, and other emerging markets. That’s because the demand for mined commodities is dominated by strong imports from emerging markets.

The demand is being driven by infrastructure build outs and the growing demand for electricity. China announced that it will increase its thermal coal imports to ease supply problems and address power shortages. Also, India’s coal imports could grow 20% in 2010 and continue to grow at that pace through 2014. As economic growth picks up speed in the emerging markets, the demand for mined commodities will continue to grow.

What’s more, Joy Global’s customers have been increasing their capital expenditures. This is important because the largest mining companies in the world including Peabody Energy (BTU - Analyst Report), Rio Tinto (RTP), and Vale (VALE - Analyst Report) are Joy Global customers. The companies have reactivated some of the projects they previously put on hold. As a result, Joy Global expects order rates to improve throughout 2010.

Recent Results

On December 16, Joy Global reported fiscal fourth-quarter results. Net sales decreased 7% to $964 million year-over-year. Earnings per share were $1.20, up from $1.11 in the year-ago quarter and $0.15 above the Zacks Consensus Estimate. The company also ended fiscal 2009 with a healthier balance sheet. The company substantially lowered its net debt during 2009 and entered fiscal 2010 with improved liquidity.

JOYG, which has a current dividend yield of 1.4%, declared a quarterly dividend in the amount of $0.175 per share to be paid on March 19 to shareholders of record on March 5.

Joy Global plans to release fiscal first quarter 2010 earnings results on March 3.

Estimates Are Trending Higher

For fiscal year 2010, Joy Global expects to have revenues of $2.8 to $3.0 billion and earnings per share of $2.65 to $3.05.

Consesnus estimates for the January and April quarters have remained steady. However, the Zacks Consensus EPS Estimate for fiscal year 2010 increased from $2.65 three months ago to $2.99 today. The Zacks Consensus EPS Estimate for fiscal year 2011 jumped from $2.58 to $3.64 over the same time period.

Read the full analyst report on JOYG