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Altra Industrial's Growth Potential Overshadowed by Risks
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We issued an updated research report on Altra Industrial Motion Corp. on Aug 26, 2016. This machinery company, with a $746 million market capitalization, has strong fundamentals supporting growth. However exposure to near-term headwinds is restricting its growth momentum. Below-mentioned pros and cons will justify our investment ranking on the company.
Growth Drivers
A diversified product portfolio as well as businesses in diverse nations and end-markets has enabled Altra Industrial Motion to strengthen its organic growth over time and remain a prime driving force. Product-line primarily includes clutches & brakes, couplings, and gearing & power transmission components, while end-markets served are energy, general industrial, material handling, metals, mining, special machinery, transportation, and turf and garden industries.
Also, Altra Industrial Motion aims at profitability through strict expense control, improvement in supply chains worldwide and favorable alignment of its businesses. The company’s restructuring measures calls for lowering the number of facilities by 20−30% by 2018. In second-quarter, the company completed five facility consolidations while another two are underway. The company anticipates reaping $5 million savings from them. Moreover, the company believes in rewarding its shareholders handsomely through dividends and share buybacks.
Over the long run, Altra Industrial Motion anticipates revenues growth to be in excess of the Gross Domestic Product. Further, it aims to improve its operating margin by 50 basis points on strategic pricing.
Near-Term Headwinds
Altra Industrial Motion is exposed to risks arising from stiff competition, high costs and weak industrial end-markets. Difficulties or delays in research and development or production and services, apart from failure of new products and technologies in the market, may hurt the company’s position. Also, negative foreign currency movements are likely to hurt results.
For 2016, the company anticipates businesses to remain weak for industrial end markets. The company anticipates sales within $700−$720 million, below $747 million generated in 2015; while earnings per share are projected in a range of $1.40−$1.50, lower than $1.64 earned in 2015.
Conclusion
Altra Industrial Motion currently carries a Zacks Rank #3 (Hold). There are certain stocks in the machinery industry that have been performing better than Altra Industrial Motion, and have gained high investment value. These include DXP Enterprises, Inc. (DXPE - Free Report) , Gorman-Rupp Co. (GRC - Free Report) and Nordson Corporation (NDSN - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
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Altra Industrial's Growth Potential Overshadowed by Risks
We issued an updated research report on Altra Industrial Motion Corp. on Aug 26, 2016. This machinery company, with a $746 million market capitalization, has strong fundamentals supporting growth. However exposure to near-term headwinds is restricting its growth momentum. Below-mentioned pros and cons will justify our investment ranking on the company.
Growth Drivers
A diversified product portfolio as well as businesses in diverse nations and end-markets has enabled Altra Industrial Motion to strengthen its organic growth over time and remain a prime driving force. Product-line primarily includes clutches & brakes, couplings, and gearing & power transmission components, while end-markets served are energy, general industrial, material handling, metals, mining, special machinery, transportation, and turf and garden industries.
Also, Altra Industrial Motion aims at profitability through strict expense control, improvement in supply chains worldwide and favorable alignment of its businesses. The company’s restructuring measures calls for lowering the number of facilities by 20−30% by 2018. In second-quarter, the company completed five facility consolidations while another two are underway. The company anticipates reaping $5 million savings from them. Moreover, the company believes in rewarding its shareholders handsomely through dividends and share buybacks.
Over the long run, Altra Industrial Motion anticipates revenues growth to be in excess of the Gross Domestic Product. Further, it aims to improve its operating margin by 50 basis points on strategic pricing.
Near-Term Headwinds
Altra Industrial Motion is exposed to risks arising from stiff competition, high costs and weak industrial end-markets. Difficulties or delays in research and development or production and services, apart from failure of new products and technologies in the market, may hurt the company’s position. Also, negative foreign currency movements are likely to hurt results.
For 2016, the company anticipates businesses to remain weak for industrial end markets. The company anticipates sales within $700−$720 million, below $747 million generated in 2015; while earnings per share are projected in a range of $1.40−$1.50, lower than $1.64 earned in 2015.
Conclusion
Altra Industrial Motion currently carries a Zacks Rank #3 (Hold). There are certain stocks in the machinery industry that have been performing better than Altra Industrial Motion, and have gained high investment value. These include DXP Enterprises, Inc. (DXPE - Free Report) , Gorman-Rupp Co. (GRC - Free Report) and Nordson Corporation (NDSN - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>