A month has gone by since the last earnings report for Actuant Corporation . Shares have added about 8.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ATU 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 drivers.
Second-Quarter Fiscal 2018 Results
Actuant reported mixed results for the fiscal second quarter (ended February 2018).
Earnings and Revenues
Quarterly adjusted earnings came in at 13 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line came in 18.2% higher than the year-ago tally.
Net sales during the reported quarter came in at $275.2 million, outpacing the Zacks Consensus Estimate of $269 million. The top line also came in 6.3% higher than the prior-year tally. Core sales were up 3% year over year in the quarter.
Segmental Details
Revenues in the Industrial segment were up 8.1% year over year to $99.1 million. This upside primarily stemmed from sturdy sales of standard industrial tools across all end markets. Core sales of the segment increased 4% year over year.
Net sales of the Engineered Solutions segment jumped 16.7% year over year to $110.1 million. Continued sales growth from off-highway equipment markets as well as modest truck sales growth supported the uptick. Core sales of the segment were up 10% year over year.
However, the Energy segment revenues dipped 9.5% to $66 million in the quarter. Actaunt noted that headwinds rising from the Viking business spin-off and the Mirage buyout, as well as dismal Hydratight sales, resulted in the downside. Core sales of the segment were down 8% year over year.
Costs and Margins
Cost of products sold in the reported quarter came in at $185.5 million, higher than $171.5 million recorded in the year-ago quarter. Gross profit margin in the fiscal second quarter came in at 32.6%, contracting 110 basis points (bps) year over year.
Selling, administrative and engineering expenses totaled $68.5 million, higher than $67 million incurred in the comparable quarter last fiscal. Quarterly operating margin shrunk 160 bps to 3.5%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Actuant had cash and cash equivalents worth $153.6 million, lower than $229.6 million recorded at the end of fiscal 2017. Long-term debt totaled $517.3 million, down from $531.9 million recorded on Aug 31, 2017.
In the reported quarter, Actuant used cash worth $1.6 million from operating activities, as against the $2.2-million cash provided in the year-ago period. Capital expenditure came in at $4.6 million compared to $9.6 million registered in the year-earlier quarter.
Outlook
Actuant anticipates to report revenues within $300-$310 million and adjusted earnings per share (EPS) within 33-38 cents in third-quarter fiscal 2018.
The company believes improving end-market conditions will continue to bolster its revenues in the upcoming quarters. Moreover, the company stated that favorable foreign currently translation impact will help drive its top-line performance. The company raised its sales outlook for fiscal 2018 from $1.10-$1.13 billion to $1.140-$1.160 billion (estimating core sales growth of 2-4%).
However, Actuant expects that the ongoing engineering and commercial investments, certain maintenance-related expenses, expedited freight, wage inflation and input cost upsurge will dent its near-term margins. Notably, the company lowered its fiscal 2018 EPS guidance to $1.00-$1.10 per share from the prior view of $1.05-$1.15 per share.
The company intends to improve its near-term operational performance on the back of the ongoing portfolio management and restructuring actions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Actuant Corporation Price and Consensus
VGM Scores
At this time, ATU has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise ATU has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Actuant (ATU) Up 8.9% Since Its Last Earnings Report?
A month has gone by since the last earnings report for Actuant Corporation . Shares have added about 8.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ATU 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 drivers.
Second-Quarter Fiscal 2018 Results
Actuant reported mixed results for the fiscal second quarter (ended February 2018).
Earnings and Revenues
Quarterly adjusted earnings came in at 13 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line came in 18.2% higher than the year-ago tally.
Net sales during the reported quarter came in at $275.2 million, outpacing the Zacks Consensus Estimate of $269 million. The top line also came in 6.3% higher than the prior-year tally. Core sales were up 3% year over year in the quarter.
Segmental Details
Revenues in the Industrial segment were up 8.1% year over year to $99.1 million. This upside primarily stemmed from sturdy sales of standard industrial tools across all end markets. Core sales of the segment increased 4% year over year.
Net sales of the Engineered Solutions segment jumped 16.7% year over year to $110.1 million. Continued sales growth from off-highway equipment markets as well as modest truck sales growth supported the uptick. Core sales of the segment were up 10% year over year.
However, the Energy segment revenues dipped 9.5% to $66 million in the quarter. Actaunt noted that headwinds rising from the Viking business spin-off and the Mirage buyout, as well as dismal Hydratight sales, resulted in the downside. Core sales of the segment were down 8% year over year.
Costs and Margins
Cost of products sold in the reported quarter came in at $185.5 million, higher than $171.5 million recorded in the year-ago quarter. Gross profit margin in the fiscal second quarter came in at 32.6%, contracting 110 basis points (bps) year over year.
Selling, administrative and engineering expenses totaled $68.5 million, higher than $67 million incurred in the comparable quarter last fiscal. Quarterly operating margin shrunk 160 bps to 3.5%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Actuant had cash and cash equivalents worth $153.6 million, lower than $229.6 million recorded at the end of fiscal 2017. Long-term debt totaled $517.3 million, down from $531.9 million recorded on Aug 31, 2017.
In the reported quarter, Actuant used cash worth $1.6 million from operating activities, as against the $2.2-million cash provided in the year-ago period. Capital expenditure came in at $4.6 million compared to $9.6 million registered in the year-earlier quarter.
Outlook
Actuant anticipates to report revenues within $300-$310 million and adjusted earnings per share (EPS) within 33-38 cents in third-quarter fiscal 2018.
The company believes improving end-market conditions will continue to bolster its revenues in the upcoming quarters. Moreover, the company stated that favorable foreign currently translation impact will help drive its top-line performance. The company raised its sales outlook for fiscal 2018 from $1.10-$1.13 billion to $1.140-$1.160 billion (estimating core sales growth of 2-4%).
However, Actuant expects that the ongoing engineering and commercial investments, certain maintenance-related expenses, expedited freight, wage inflation and input cost upsurge will dent its near-term margins. Notably, the company lowered its fiscal 2018 EPS guidance to $1.00-$1.10 per share from the prior view of $1.05-$1.15 per share.
The company intends to improve its near-term operational performance on the back of the ongoing portfolio management and restructuring actions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Actuant Corporation Price and Consensus
Actuant Corporation Price and Consensus | Actuant Corporation Quote
VGM Scores
At this time, ATU has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise ATU has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.