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Altra Industrial Poised for Growth Despite Near-Term Risks
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We issued an updated research report on Altra Industrial Motion Corp. on Mar 24. The company specializes in manufacturing and distributing a diversified range of mechanical power transmission, or MPT components.
Over the last six months, shares of this Zacks Rank #3 (Hold) company yielded 34.95% return, outperforming the gain of 15.27% recorded by the Zacks categorized Machinery General Industrial industry.
However, on a P/E (TTM) basis, Altra Industrial Motion’s shares looks overvalued compared with the benchmark S&P 500 index with respective tallies of 24.14x and 20.21x in the last six-month period. Also, the stock is currently trading above the average of last six months P/E multiples.
Below we discuss some other relevant points that justify Altra Industrial Motion’s current Zacks ranking:
Over the long term, Altra Industrial Motion expects to become a leading global provider of electrochemical power transmission solutions. The company anticipates revenue growth to be in excess of the Gross Domestic Product (“GDP”) while aims to improve its operating margin by 50 basis points on strategic pricing. Also, an effective supply chain management and accretive acquisitions will remain the company’s preferred modes for enhancing profitability. In Jan 2017, the company closed the acquisition of Stromag business of GKN plc. The acquired assets are anticipated to be earnings accretive in 2017.
Also, Altra Industrial Motion has initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with the current demand levels. By 2018, the company intends to lower the number of its facilities by 20−30%, as well as improve its supply chain worldwide. As part of these restructuring activities, the company completed five facility consolidations in first-half 2016 while closed one facility in the third and one facility in the fourth quarter. In first-quarter 2017, the company closed one facility. It anticipates savings of $5.7 million from these eight facilities.
For 2017, Altra Industrial Motion anticipates accruing earnings within the range of $1.75–$1.85 per share, higher than earnings of $1.56 reported for full-year 2016.
However, the company is exposed to risks arising from stiff competition and high costs. Difficulties or delays in research and development or production and services, apart from failure of new products and technologies in the market, may hurt its position. Also, negative foreign currency movements are likely to hurt results.
Stocks to Consider
Altra Industrial Motion currently has a $1.1 billion market capitalization. Some better-ranked stocks in the industry include Parker-Hannifin Corporation (PH - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While both Parker-Hannifin and Roper Technologies sport a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Parker-Hannifin reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 12.44%. Also, bottom-line expectations for fiscal 2017 and fiscal 2018 have improved over the past 60 days.
Roper Technologies’ financial performance has been impressive, with an average positive earnings surprise of 0.92% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward over the last 60 days.
Applied Industrial Technologies reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 6.18%. Also, its earnings estimates for fiscal 2018 improved in the last 60 days.
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Altra Industrial Poised for Growth Despite Near-Term Risks
We issued an updated research report on Altra Industrial Motion Corp. on Mar 24. The company specializes in manufacturing and distributing a diversified range of mechanical power transmission, or MPT components.
Over the last six months, shares of this Zacks Rank #3 (Hold) company yielded 34.95% return, outperforming the gain of 15.27% recorded by the Zacks categorized Machinery General Industrial industry.
However, on a P/E (TTM) basis, Altra Industrial Motion’s shares looks overvalued compared with the benchmark S&P 500 index with respective tallies of 24.14x and 20.21x in the last six-month period. Also, the stock is currently trading above the average of last six months P/E multiples.
Below we discuss some other relevant points that justify Altra Industrial Motion’s current Zacks ranking:
Over the long term, Altra Industrial Motion expects to become a leading global provider of electrochemical power transmission solutions. The company anticipates revenue growth to be in excess of the Gross Domestic Product (“GDP”) while aims to improve its operating margin by 50 basis points on strategic pricing. Also, an effective supply chain management and accretive acquisitions will remain the company’s preferred modes for enhancing profitability. In Jan 2017, the company closed the acquisition of Stromag business of GKN plc. The acquired assets are anticipated to be earnings accretive in 2017.
Also, Altra Industrial Motion has initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with the current demand levels. By 2018, the company intends to lower the number of its facilities by 20−30%, as well as improve its supply chain worldwide. As part of these restructuring activities, the company completed five facility consolidations in first-half 2016 while closed one facility in the third and one facility in the fourth quarter. In first-quarter 2017, the company closed one facility. It anticipates savings of $5.7 million from these eight facilities.
For 2017, Altra Industrial Motion anticipates accruing earnings within the range of $1.75–$1.85 per share, higher than earnings of $1.56 reported for full-year 2016.
However, the company is exposed to risks arising from stiff competition and high costs. Difficulties or delays in research and development or production and services, apart from failure of new products and technologies in the market, may hurt its position. Also, negative foreign currency movements are likely to hurt results.
Stocks to Consider
Altra Industrial Motion currently has a $1.1 billion market capitalization. Some better-ranked stocks in the industry include Parker-Hannifin Corporation (PH - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While both Parker-Hannifin and Roper Technologies sport a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Parker-Hannifin reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 12.44%. Also, bottom-line expectations for fiscal 2017 and fiscal 2018 have improved over the past 60 days.
Roper Technologies’ financial performance has been impressive, with an average positive earnings surprise of 0.92% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward over the last 60 days.
Applied Industrial Technologies reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 6.18%. Also, its earnings estimates for fiscal 2018 improved in the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging
phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>