A month has gone by since the last earnings report for Altra Industrial Motion Corp. . Shares have added about 4.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Altra Industrial Tops Q1 Earnings, Raises '17 View
Altra Industrial Motion kept its earnings streak alive in first-quarter 2017, with its earnings and revenues surpassing their respective estimates by 32.5% and 1.01%.
Non-GAAP earnings in the quarter came in at $0.53 per share, above the Zacks Consensus Estimate of $0.40. Also, the bottom line grew 39.5% from the year-ago tally of $0.38.
The company's revenues totaled $215.4 million, increasing 19.3% year over year. The year-over-year improvement was triggered by 1.6% growth in organic revenues and 19.2% positive impact from the Stromag acquisition.
Also, the top line was above the Zacks Consensus Estimate of $213 million.
Segmental Details: Altra Industrial Motion reports its revenues under the following heads/segments - Couplings Clutches & Brakes, Electromagnetic Clutches & Brakes, and Gearing. A brief snapshot of the segmental sales has been provided below:
Electromagnetic Clutches & Brakes revenues increased 11.4% year over year to $63.9 million. Couplings Clutches & Brakes sales were recorded at $106.2 million, up 40.5% year over year. Sales in the Gearing segment totaled $47.0 million, down 3.9% year over year.
Margins: In the quarter, Altra Industrial Motion's cost of sales increased 18.6% year over year, representing 69.3% of revenues compared with 69.7% in the year-ago quarter. Gross margin increased 40 basis points (bps) year over year to 30.7%. Selling, general and administrative expenses were roughly $40.3 million, accounting for 18.7% of revenues.
Balance Sheet & Cash Flow: Exiting the first quarter, Altra Industrial Motion had cash and cash equivalents of $52.9 million, down from $69.1 million in the preceding quarter. Long-term debt was at $317.6 million, down 2.6% from $326 million in the previous quarter.
In the quarter, the company generated cash of approximately $3 million from its operating activities, below the year-ago tally of $6.1 million. Capital spending was $7.3 million, up from $5.7 million in the year-ago period. During the period, the company paid dividends amounting to $3.9 million.
Outlook: For 2017, Altra Industrial Motion anticipates benefiting from the steadily improving end-markets, savings from cost-reduction initiatives and synergistic benefits from the Stromag acquisition. On the back of these expectations as well as impressive first-quarter results, the company revised its revenue guidance to $840-$855 million compared with the previous projection of $835-$855 million.
Non-GAAP earnings are anticipated to be within $1.83-$1.93 per share range, up from the earlier forecast of $1.75-$1.85. Tax rate will be 29-31%, down from 30-32% expected earlier. Capital spending will be within $25-$30 million range.
In 2015, Altra Industrial Motion initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with the current demand levels. The company intends to lower the number of its facilities by 20-30% as well as improve its supply chain worldwide. These initiatives are expected to be completed by 2018. In the first quarter, the company consolidated two facilities and will close another one by the end of the year. Total savings anticipated from these activities will likely exceed $7 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
VGM Scores
At this time, Altra Industrial's stock has an average score of 'C' on both growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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Why Is Altra Industrial (AIMC) Up 4.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Altra Industrial Motion Corp. . Shares have added about 4.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Altra Industrial Tops Q1 Earnings, Raises '17 View
Altra Industrial Motion kept its earnings streak alive in first-quarter 2017, with its earnings and revenues surpassing their respective estimates by 32.5% and 1.01%.
Non-GAAP earnings in the quarter came in at $0.53 per share, above the Zacks Consensus Estimate of $0.40. Also, the bottom line grew 39.5% from the year-ago tally of $0.38.
The company's revenues totaled $215.4 million, increasing 19.3% year over year. The year-over-year improvement was triggered by 1.6% growth in organic revenues and 19.2% positive impact from the Stromag acquisition.
Also, the top line was above the Zacks Consensus Estimate of $213 million.
Segmental Details: Altra Industrial Motion reports its revenues under the following heads/segments - Couplings Clutches & Brakes, Electromagnetic Clutches & Brakes, and Gearing. A brief snapshot of the segmental sales has been provided below:
Electromagnetic Clutches & Brakes revenues increased 11.4% year over year to $63.9 million. Couplings Clutches & Brakes sales were recorded at $106.2 million, up 40.5% year over year. Sales in the Gearing segment totaled $47.0 million, down 3.9% year over year.
Margins: In the quarter, Altra Industrial Motion's cost of sales increased 18.6% year over year, representing 69.3% of revenues compared with 69.7% in the year-ago quarter. Gross margin increased 40 basis points (bps) year over year to 30.7%. Selling, general and administrative expenses were roughly $40.3 million, accounting for 18.7% of revenues.
Balance Sheet & Cash Flow: Exiting the first quarter, Altra Industrial Motion had cash and cash equivalents of $52.9 million, down from $69.1 million in the preceding quarter. Long-term debt was at $317.6 million, down 2.6% from $326 million in the previous quarter.
In the quarter, the company generated cash of approximately $3 million from its operating activities, below the year-ago tally of $6.1 million. Capital spending was $7.3 million, up from $5.7 million in the year-ago period. During the period, the company paid dividends amounting to $3.9 million.
Outlook: For 2017, Altra Industrial Motion anticipates benefiting from the steadily improving end-markets, savings from cost-reduction initiatives and synergistic benefits from the Stromag acquisition. On the back of these expectations as well as impressive first-quarter results, the company revised its revenue guidance to $840-$855 million compared with the previous projection of $835-$855 million.
Non-GAAP earnings are anticipated to be within $1.83-$1.93 per share range, up from the earlier forecast of $1.75-$1.85. Tax rate will be 29-31%, down from 30-32% expected earlier. Capital spending will be within $25-$30 million range.
In 2015, Altra Industrial Motion initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with the current demand levels. The company intends to lower the number of its facilities by 20-30% as well as improve its supply chain worldwide. These initiatives are expected to be completed by 2018. In the first quarter, the company consolidated two facilities and will close another one by the end of the year. Total savings anticipated from these activities will likely exceed $7 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
Altra Industrial Motion Corp. Price and Consensus
Altra Industrial Motion Corp. Price and Consensus | Altra Industrial Motion Corp. Quote
VGM Scores
At this time, Altra Industrial's stock has an average score of 'C' on both growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.