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Manitowoc Downgraded to Sell on Lingering Weak Crane Demand
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On Jul 12, The Manitowoc Company, Inc. (MTW - Free Report) was downgraded a notch to a Zacks Rank #4 (Sell). Going by the Zacks model, companies carrying a Zacks Rank #4 have chances of performing weaker than the broader market over the upcoming quarters.
Why the Downgrade?
On May 9, the maker of cranes and restaurant equipment reported an adjusted loss per share of 17 cents per share compared with a loss of 5 cents reported in the year-ago quarter. Manitowoc expects revenues to decline approximately 8–10% year over year in 2017. Adjusted EBITDA is anticipated to lie between $41 million and $59 million.
Since first-quarter results, Manitowoc’s shares gained 2.7%, underperforming the 7.4% growth registered by the Zacks categorized Machinery-Construction/ Mining sub industry.
Crane demand continues to be soft and at historically low levels in America, due to depressed used-crane values and weak rental rates. Based on current activity levels, particularly in mobile cranes, the company does not expect a meaningful recovery in global demand for cranes in the near term. Mobile crane demand continues to be muted in the Americas and the Middle East region, due to persistently lower used crane values and soft rental rates. The North American market for crawler cranes continues to be extremely weak. Uncertainty among customers is mounting due to emerging market peers, apprehensions related to China’s growth outlook, persistently depressed oil prices and sluggish domestic growth.
Further, the company is facing stiff competition from China-based crane manufacturers like XCMG, Zoomlion, Sany, Fushun Excavator and Fushun Yongmao, all of which have demonstrated significant growth in the last few years. They have undergone product-line expansion, primarily adding larger cranes, and captured growing shares of the export markets in Asia, Africa, Middle East and South America.
Manitowoc is overvalued compared with its sub industry. Its forward twelve months Enterprise Value/ EBITDA (EV/EBITDA) ratio is 15.57 while the Zacks categorized Machinery-Construction/Mining sub industry’s 12-month forward EV/EBITDA ratio is much lower at 12.18. Thus, we caution the investors against entering the stock at this point.
Apogee has an average positive earnings surprise of 3.41% in the trailing four quarters. Deere generated an average positive earnings surprise of 70.41% in the last four quarters. Lakeland has an average positive earnings surprise of 49.26%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Manitowoc Downgraded to Sell on Lingering Weak Crane Demand
On Jul 12, The Manitowoc Company, Inc. (MTW - Free Report) was downgraded a notch to a Zacks Rank #4 (Sell). Going by the Zacks model, companies carrying a Zacks Rank #4 have chances of performing weaker than the broader market over the upcoming quarters.
Why the Downgrade?
On May 9, the maker of cranes and restaurant equipment reported an adjusted loss per share of 17 cents per share compared with a loss of 5 cents reported in the year-ago quarter. Manitowoc expects revenues to decline approximately 8–10% year over year in 2017. Adjusted EBITDA is anticipated to lie between $41 million and $59 million.
Since first-quarter results, Manitowoc’s shares gained 2.7%, underperforming the 7.4% growth registered by the Zacks categorized Machinery-Construction/ Mining sub industry.
Crane demand continues to be soft and at historically low levels in America, due to depressed used-crane values and weak rental rates. Based on current activity levels, particularly in mobile cranes, the company does not expect a meaningful recovery in global demand for cranes in the near term. Mobile crane demand continues to be muted in the Americas and the Middle East region, due to persistently lower used crane values and soft rental rates. The North American market for crawler cranes continues to be extremely weak. Uncertainty among customers is mounting due to emerging market peers, apprehensions related to China’s growth outlook, persistently depressed oil prices and sluggish domestic growth.
Manitowoc Company, Inc. Price and Consensus
Manitowoc Company, Inc. Price and Consensus | Manitowoc Company, Inc. Quote
Further, the company is facing stiff competition from China-based crane manufacturers like XCMG, Zoomlion, Sany, Fushun Excavator and Fushun Yongmao, all of which have demonstrated significant growth in the last few years. They have undergone product-line expansion, primarily adding larger cranes, and captured growing shares of the export markets in Asia, Africa, Middle East and South America.
Manitowoc is overvalued compared with its sub industry. Its forward twelve months Enterprise Value/ EBITDA (EV/EBITDA) ratio is 15.57 while the Zacks categorized Machinery-Construction/Mining sub industry’s 12-month forward EV/EBITDA ratio is much lower at 12.18. Thus, we caution the investors against entering the stock at this point.
Key Picks
Better-ranked stocks in the same industry include Apogee Enterprises, Inc. (APOG - Free Report) , Deere & Company (DE - Free Report) and Lakeland Industries, Inc. (LAKE - Free Report) . All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Apogee has an average positive earnings surprise of 3.41% in the trailing four quarters. Deere generated an average positive earnings surprise of 70.41% in the last four quarters. Lakeland has an average positive earnings surprise of 49.26%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>