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Manitowoc (MTW) Downgraded to Strong Sell: Dump It?
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On Mar 21, Zacks Investment Research downgraded The Manitowoc Company, Inc. (MTW - Free Report) to a Zacks Rank #5 (Strong Sell). Going by the Zacks model, companies holding a Zacks Rank #5 are likely to underperform the broader market.
Why the Downgrade?
On Feb 1, the maker of cranes and restaurant equipment reported a loss of 23 cents per share in fourth-quarter 2016, as against earnings of 5 cents reported in the year-ago quarter. Manitowoc also posted a 30% year-over-year plunge in sales.
Crane demand continues to remain soft and at historically low levels in America, due to depressed used crane values and weak rental rates. The guidance for 2017 reflects the sluggish macroeconomic environment and tepid market conditions. The company projects revenues in 2017 to be down approximately 8–10% year over year.
Based on current activity levels, particularly in mobile cranes, Manitowoc does not expect a meaningful recovery in global demand for cranes any time soon. Uncertainty among customers has been mounting due to emerging market peers, apprehensions related to China’s growth outlook, depressed oil prices and dismal domestic growth.
Further, Manitowoc’s backlog totaled $323.8 million at the end of 2016, down from the third-quarter 2016 backlog of $353.6 million. Orders of $348.3 million in the fourth quarter were also down by $76.2 million or 18% on a year-over-year basis, due to poor demand in North America and the Middle East.
Also, analysts have become increasingly bearish on the stock over the past couple of months with estimates moving south. With all estimates moving down and no upward revision in the past 60 days, the Zacks Consensus Estimate for the current quarter now widens to a loss of 15 cents from a loss of 11 cents.
Manitowoc uderperformed the Zacks categorized Machinery-Construction/Mining industry over the past three months. The company’s shares dipped 1.5% during this period, compared with roughly 1.5% gain recorded by the industry.
Further, Manitowoc is overvalued compared to its sub industry. Its forward twelve months Enterprise Value/ EBITDA (EV/EBITDA) ratio is 19.79 while the Zacks categorized Machinery-Construction/Mining sub industry’s twelve months forward EV/EBITDA ratio is much lower at 12.56. Thus, we caution the investors against entering the stock at this point.
Roper Technologies has a positive average earnings surprise of 0.92% for the last four quarters. Parker-Hannifin has delivered an average positive earnings surprise of 12.44% in the past four quarters. Casella Waste generated a remarkable positive average earnings surprise of 165.21% over the trailing four quarters.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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Manitowoc (MTW) Downgraded to Strong Sell: Dump It?
On Mar 21, Zacks Investment Research downgraded The Manitowoc Company, Inc. (MTW - Free Report) to a Zacks Rank #5 (Strong Sell). Going by the Zacks model, companies holding a Zacks Rank #5 are likely to underperform the broader market.
Why the Downgrade?
On Feb 1, the maker of cranes and restaurant equipment reported a loss of 23 cents per share in fourth-quarter 2016, as against earnings of 5 cents reported in the year-ago quarter. Manitowoc also posted a 30% year-over-year plunge in sales.
Crane demand continues to remain soft and at historically low levels in America, due to depressed used crane values and weak rental rates. The guidance for 2017 reflects the sluggish macroeconomic environment and tepid market conditions. The company projects revenues in 2017 to be down approximately 8–10% year over year.
Based on current activity levels, particularly in mobile cranes, Manitowoc does not expect a meaningful recovery in global demand for cranes any time soon. Uncertainty among customers has been mounting due to emerging market peers, apprehensions related to China’s growth outlook, depressed oil prices and dismal domestic growth.
Further, Manitowoc’s backlog totaled $323.8 million at the end of 2016, down from the third-quarter 2016 backlog of $353.6 million. Orders of $348.3 million in the fourth quarter were also down by $76.2 million or 18% on a year-over-year basis, due to poor demand in North America and the Middle East.
Also, analysts have become increasingly bearish on the stock over the past couple of months with estimates moving south. With all estimates moving down and no upward revision in the past 60 days, the Zacks Consensus Estimate for the current quarter now widens to a loss of 15 cents from a loss of 11 cents.
Manitowoc Company, Inc. (The) Price and Consensus
Manitowoc Company, Inc. (The) Price and Consensus | Manitowoc Company, Inc. (The) Quote
Manitowoc uderperformed the Zacks categorized Machinery-Construction/Mining industry over the past three months. The company’s shares dipped 1.5% during this period, compared with roughly 1.5% gain recorded by the industry.
Further, Manitowoc is overvalued compared to its sub industry. Its forward twelve months Enterprise Value/ EBITDA (EV/EBITDA) ratio is 19.79 while the Zacks categorized Machinery-Construction/Mining sub industry’s twelve months forward EV/EBITDA ratio is much lower at 12.56. Thus, we caution the investors against entering the stock at this point.
Key Picks
Better-ranked stocks in the same space include Roper Technologies, Inc. (ROP - Free Report) , Parker-Hannifin Corp. (PH - Free Report) and Casella Waste Systems, Inc. (CWST - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Roper Technologies has a positive average earnings surprise of 0.92% for the last four quarters. Parker-Hannifin has delivered an average positive earnings surprise of 12.44% in the past four quarters. Casella Waste generated a remarkable positive average earnings surprise of 165.21% over the trailing four quarters.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>