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Sun Hydraulics (SNHY) Tops Q1 Earnings & Sales, Keeps View
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Sun Hydraulics Corporation reported impressive first-quarter 2017 results, with earnings per share and revenues surpassing their respective estimates by 5.56% and 8.18%.
The company’s earnings came in at 38 cents per share, above the Zacks Consensus Estimate of 36 cents. Also, the bottom line increased 24% from the year-ago tally of 31 cents on the back of solid sales growth, partially offset by amortization expenses related to acquired assets and higher interest expenses.
The company’s net sales totaled $81.4 million, beating the Zacks Consensus Estimate of $75 million. Also, the top line increased 59% year over year on the back of solid results from all end-markets and acquired assets of Enovation Controls (completed in Dec 2016).
On a geographical basis, sales from the Americas increased 91.5% year over year to $47.3 million, representing 58% of net sales. Europe/Middle East/Africa sales comprising roughly 25% of net sales were $20.1 million, up 28% year over year. Sales from Asia Pacific grew 32.1% to $14 million. It represented 17% of net sales.
Segmental Revenues
Sun Hydraulics reports its quarterly sales under two segmental heads. Details for this quarter are provided below:
Revenues from Hydraulics totaled $54.1 million, up 7.8% year over year. It represented 66.5% of net sales.
Revenues from Electronics totaled $27.2 million, up from $0.845 million generated in the year-ago quarter. It represented 33.5% of net sales.
Margins
In the quarter, Sun Hydraulics’ gross margin improved as 54% increase in cost of sales was more than offset by sales growth. Gross profit surged 68% year over year and was 40.3% of sales compared with 38.3% in the year-ago quarter.
Selling, engineering and administrative expenses, as a percentage of revenues were 18.1% compared with 14.6% in the year-ago quarter. Operating income increased 33% year over year to $15.8 million while margin came in at 19.4% compared with 23.3% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Sun Hydraulics had cash and cash equivalents of $70.4 million, down from $74.2 million in the preceding quarter.
In the quarter, the company’s net cash generation from operating activities increased 18.5% year over year to $12.4 million. Capital spending totaled $0.8 million compared with $1 million in the year-ago quarter. During the quarter, the company paid a dividend of $3 million to its shareholders.
Outlook
Sun Hydraulics is working diligently to improve its product portfolio and serve its customers better. The company aims to improve its operational execution, product development and market penetration. It revealed that it is successfully proceeding with the integration of Enovation Controls (acquired in Dec 2016).
For 2017, Sun Hydraulics reiterated its guidance, anticipating revenues to come within $295−$310 million range, including $205−$215 million from Hydraulics and $90−$95 million from Electronics. Operating margin will be 20−22% while capital spending will likely be within $8−$10 million range. Effective tax rate will be 32−34%.
With a market capitalization of $1.15 billion, Sun Hydraulics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Applied Industrial Technologies, Inc. (AIT - Free Report) , Graco Inc. (GGG - Free Report) and Parker-Hannifin Corporation (PH - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial Technologies’ financial performance was impressive, with an average positive earnings surprise of 9.78% for the last four quarters. Earnings estimates for fiscal 2017 and fiscal 2018 were revised upward over the last 60 days.
Graco reported an average positive earnings surprise of 13.88% in the trailing four quarters. The company’s bottom-line expectations for 2017 and 2018 improved over the past 60 days.
Parker-Hannifin Corporation’ financial performance was remarkable, with an average positive earnings surprise of 14.94% for the last four quarters. Earnings estimates for fiscal 2017 and fiscal 2018 were revised upward over the last 60 days.
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Sun Hydraulics (SNHY) Tops Q1 Earnings & Sales, Keeps View
Sun Hydraulics Corporation reported impressive first-quarter 2017 results, with earnings per share and revenues surpassing their respective estimates by 5.56% and 8.18%.
The company’s earnings came in at 38 cents per share, above the Zacks Consensus Estimate of 36 cents. Also, the bottom line increased 24% from the year-ago tally of 31 cents on the back of solid sales growth, partially offset by amortization expenses related to acquired assets and higher interest expenses.
The company’s net sales totaled $81.4 million, beating the Zacks Consensus Estimate of $75 million. Also, the top line increased 59% year over year on the back of solid results from all end-markets and acquired assets of Enovation Controls (completed in Dec 2016).
On a geographical basis, sales from the Americas increased 91.5% year over year to $47.3 million, representing 58% of net sales. Europe/Middle East/Africa sales comprising roughly 25% of net sales were $20.1 million, up 28% year over year. Sales from Asia Pacific grew 32.1% to $14 million. It represented 17% of net sales.
Segmental Revenues
Sun Hydraulics reports its quarterly sales under two segmental heads. Details for this quarter are provided below:
Revenues from Hydraulics totaled $54.1 million, up 7.8% year over year. It represented 66.5% of net sales.
Revenues from Electronics totaled $27.2 million, up from $0.845 million generated in the year-ago quarter. It represented 33.5% of net sales.
Margins
In the quarter, Sun Hydraulics’ gross margin improved as 54% increase in cost of sales was more than offset by sales growth. Gross profit surged 68% year over year and was 40.3% of sales compared with 38.3% in the year-ago quarter.
Selling, engineering and administrative expenses, as a percentage of revenues were 18.1% compared with 14.6% in the year-ago quarter. Operating income increased 33% year over year to $15.8 million while margin came in at 19.4% compared with 23.3% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Sun Hydraulics had cash and cash equivalents of $70.4 million, down from $74.2 million in the preceding quarter.
In the quarter, the company’s net cash generation from operating activities increased 18.5% year over year to $12.4 million. Capital spending totaled $0.8 million compared with $1 million in the year-ago quarter. During the quarter, the company paid a dividend of $3 million to its shareholders.
Outlook
Sun Hydraulics is working diligently to improve its product portfolio and serve its customers better. The company aims to improve its operational execution, product development and market penetration. It revealed that it is successfully proceeding with the integration of Enovation Controls (acquired in Dec 2016).
For 2017, Sun Hydraulics reiterated its guidance, anticipating revenues to come within $295−$310 million range, including $205−$215 million from Hydraulics and $90−$95 million from Electronics. Operating margin will be 20−22% while capital spending will likely be within $8−$10 million range. Effective tax rate will be 32−34%.
Sun Hydraulics Corporation Price and Consensus
Sun Hydraulics Corporation Price and Consensus | Sun Hydraulics Corporation Quote
Zacks Rank & Key Picks
With a market capitalization of $1.15 billion, Sun Hydraulics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Applied Industrial Technologies, Inc. (AIT - Free Report) , Graco Inc. (GGG - Free Report) and Parker-Hannifin Corporation (PH - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial Technologies’ financial performance was impressive, with an average positive earnings surprise of 9.78% for the last four quarters. Earnings estimates for fiscal 2017 and fiscal 2018 were revised upward over the last 60 days.
Graco reported an average positive earnings surprise of 13.88% in the trailing four quarters. The company’s bottom-line expectations for 2017 and 2018 improved over the past 60 days.
Parker-Hannifin Corporation’ financial performance was remarkable, with an average positive earnings surprise of 14.94% for the last four quarters. Earnings estimates for fiscal 2017 and fiscal 2018 were revised upward over the last 60 days.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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