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Should Milacron (MCRN) Stock Be Part of Your Portfolio Now?
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Milacron Holdings Corp. has been performing well of late, gaining 49% in 2016. Milacron, with a market capitalization of $1.23 billion is a global leader in the manufacture, distribution, and service of highly engineered and customized systems used in the plastic technology and processing industry. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as Milacron looks promising and is poised to carry the momentum ahead.
Strong Order & Backlog Growth
Milacron’s both top-line and bottom-line declined on a year-over-year basis in the third quarter of 2016. However, the company has witnessed a 4.3% order growth rate driven by very strong orders in the hot runner business, low single-digit growth in Advanced Plastic Processing Technologies (APPT) segment. Geographically, order growth was strong in Europe, India and Asia markets which helped negate weakness in North America.
From an end-market perspective, packaging, consumer goods, and industrial, experienced strong growth. Backlog at the quarter end was also up 13% compared with the prior-year end.
Positive Earnings Surprise History
Milacron has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 5.66%.
The company’s estimates for the fiscal 2016 and fiscal 2017, have moved north in the past 30 days, reflecting the positive outlook of analysts on the stock. For fiscal 2016, estimates have inched up 1% to the current level of $1.39 per share in the past 30 days. For fiscal 2017, the Zacks Consensus Estimate has moved up 3% to $1.59 per share.
Expectations of an Earnings Beat
Our proven model shows that Milacron is likely to beat earnings in the fourth quarter 2016 when it reports results on Feb 23, 2017 before the opening bell. This is because the company has the right combination of two key ingredients – a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Milacron currently carries a Zacks Rank #2 and has an Earnings ESP of +11.43%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Price Performance
A look at the company’s share price movement reveals an impressive one-year return of approximately 44.5%, outpacing the Zacks categorized Manufacturing-Material Handling sub industry’s rise of 41.8% in the same time frame.
Growth Prospects
Milacron’s strategy is focused on enhancing revenue and operating profits through selective initiatives that leverage market position, geographic footprint and core competencies. Management expects profitability to be supported by both revenue growth and margin expansion in the near term. Revenue growth will come from underlying market growth in key segments, geographic expansion of certain product lines, consistent penetration of hot runners, and incremental share gain from new products.
Since the past two years, Milacron has undertaken a number of organizational redesign and cost-reduction initiatives to improve cost structure and operating flexibility. These actions are expected to yield approximately $35 million of annual run-rate cost savings by the end of 2017.
Demand for a diverse range of finished plastic products is on the rise in many markets, including automotive, construction and consumer products. This is being escalated by global population growth, along with sustained urbanization, increased purchasing power and improved lifestyle in emerging markets. Given the company’s strong global presence, it is well poised to capitalize on this growth. Further, it has made significant investments in China and India, considering the projected growth rates of the plastic business in these markets.
Attractive Valuation
Milacron is currently trading at a forward P/E of 11.3, at a discount to the industry average of 22.7x. The cheap valuation is well supported by its long-term estimated earnings growth rate of 12.00%. In view of the above positives, we believe that Milacron represents an attractive investment opportunity at current levels.
Altra Industrial Motion has a positive average earnings surprise of 8.06% in the last four quarters. Actuant generated a positive average earnings surprise of 11.47% in the trailing four quarters. Avery Dennison has delivered an average positive earnings surprise of 6.17% in the last four quarters.
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Should Milacron (MCRN) Stock Be Part of Your Portfolio Now?
Milacron Holdings Corp. has been performing well of late, gaining 49% in 2016. Milacron, with a market capitalization of $1.23 billion is a global leader in the manufacture, distribution, and service of highly engineered and customized systems used in the plastic technology and processing industry. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as Milacron looks promising and is poised to carry the momentum ahead.
Strong Order & Backlog Growth
Milacron’s both top-line and bottom-line declined on a year-over-year basis in the third quarter of 2016. However, the company has witnessed a 4.3% order growth rate driven by very strong orders in the hot runner business, low single-digit growth in Advanced Plastic Processing Technologies (APPT) segment. Geographically, order growth was strong in Europe, India and Asia markets which helped negate weakness in North America.
From an end-market perspective, packaging, consumer goods, and industrial, experienced strong growth. Backlog at the quarter end was also up 13% compared with the prior-year end.
Positive Earnings Surprise History
Milacron has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 5.66%.
Milacron Holdings Corp. Price and EPS Surprise
Milacron Holdings Corp. Price and EPS Surprise | Milacron Holdings Corp. Quote
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Estimates Moving Up
The company’s estimates for the fiscal 2016 and fiscal 2017, have moved north in the past 30 days, reflecting the positive outlook of analysts on the stock. For fiscal 2016, estimates have inched up 1% to the current level of $1.39 per share in the past 30 days. For fiscal 2017, the Zacks Consensus Estimate has moved up 3% to $1.59 per share.
Expectations of an Earnings Beat
Our proven model shows that Milacron is likely to beat earnings in the fourth quarter 2016 when it reports results on Feb 23, 2017 before the opening bell. This is because the company has the right combination of two key ingredients – a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Milacron currently carries a Zacks Rank #2 and has an Earnings ESP of +11.43%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Price Performance
A look at the company’s share price movement reveals an impressive one-year return of approximately 44.5%, outpacing the Zacks categorized Manufacturing-Material Handling sub industry’s rise of 41.8% in the same time frame.
Growth Prospects
Milacron’s strategy is focused on enhancing revenue and operating profits through selective initiatives that leverage market position, geographic footprint and core competencies. Management expects profitability to be supported by both revenue growth and margin expansion in the near term. Revenue growth will come from underlying market growth in key segments, geographic expansion of certain product lines, consistent penetration of hot runners, and incremental share gain from new products.
Since the past two years, Milacron has undertaken a number of organizational redesign and cost-reduction initiatives to improve cost structure and operating flexibility. These actions are expected to yield approximately $35 million of annual run-rate cost savings by the end of 2017.
Demand for a diverse range of finished plastic products is on the rise in many markets, including automotive, construction and consumer products. This is being escalated by global population growth, along with sustained urbanization, increased purchasing power and improved lifestyle in emerging markets. Given the company’s strong global presence, it is well poised to capitalize on this growth. Further, it has made significant investments in China and India, considering the projected growth rates of the plastic business in these markets.
Attractive Valuation
Milacron is currently trading at a forward P/E of 11.3, at a discount to the industry average of 22.7x. The cheap valuation is well supported by its long-term estimated earnings growth rate of 12.00%. In view of the above positives, we believe that Milacron represents an attractive investment opportunity at current levels.
Other Stocks to Consider
Some other favourably placed stocks in the same space include Altra Industrial Motion Corp. , Actuant Corp. and Avery Dennison Corp. (AVY - Free Report) . All three of these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion has a positive average earnings surprise of 8.06% in the last four quarters. Actuant generated a positive average earnings surprise of 11.47% in the trailing four quarters. Avery Dennison has delivered an average positive earnings surprise of 6.17% in the last four quarters.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>