We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Strong Order Flow to Drive Manitowoc Amid High Input Costs
Read MoreHide Full Article
On Mar 26, we issued an updated research report on The Manitowoc Company, Inc. (MTW - Free Report) . Product innovation and rise in orders will continue to be growth drivers for the company. Also, its focus on cost control and pricing actions will help counter input cost inflation.
Let's analyze the factors in detail.
Solid Order Growth Instils Optimism
Orders totaled $1,910.7 million in 2018, marking a year-over-year increase of 3%. This increase can be attributed to new products and favorable market conditions. In the Americas, demand is being led by commercial construction and energy end markets. The North American oil and gas environment continues to improve with investment in upstream well completions, continuing to drive crane utilization and replacement demand.
Manitowoc’s backlog totaled $670.6 million as of Dec 31, 2018, marking an increase of 11% from backlog of $606.6 million at the end of the prior year. This can primarily be attributed to improved demand in the U.S. markets. Currently, over 75% of the year-end backlog is scheduled to ship in the first half of 2019. This provides improved revenue visibility for the year.
The company’s revenue guidance for 2019 is at $1.85-$1.95 billion. Compared with revenues of $1.85 billion in 2018, the mid-point of the guidance reflects year-over-year growth of 3%. It also provided EBITDA guidance at $125-$145 million for 2019. The mid-point of the guidance projects year-over-year growth of 16%. Manitowoc also expects capital expenditure of $35 million for the current year.
The Zacks Consensus Estimate for revenues for 2019 is pinned at $1.91 billion, projecting year-over-year growth of 3%. The Zacks Consensus Estimate for earnings is pegged at $1.31, projecting impressive growth of 105%.
Pricing Actions, Cost Control to Negate Impact of Tariffs
Incremental input costs will continue to impact margins in the near term primarily due to the imposition of tariffs on steel imports. Further, supply-chain challenges continue to be a headwind. Fluctuating foreign exchange rates are weighing on Manitowoc's margins, particularly on cranes produced in Europe that it sells in the United States.
The company continues to execute the strategy to cover cost inflation through pricing actions. Further, it remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste. It has also been taking aggressive steps to support supply-chain partners to ensure timely delivery of components.
Innovation — A Key Catalyst
Manitowoc’s aftermarket sales in 2018 were up 8%. Growth primarily stemmed from higher-margin parts and services. The company remains focused on improving this crucial part of the business. Further, it noted that there is scope of increasing revenues from the Middle East. It continues to strengthen ties with channel partners in the region to capitalize on the recovery in markets.
The company’s focus on innovation will continue to aid in leading the industry by providing differentiated products that add value to customers. It introduced the tower crane at Bauma, China, called the MCT 565 for the Asia market. Following the positive response, the company is now developing an entire range of tower cranes in China for the Asia market, which will enable it to grow organically in the region. Manitowoc is set to introduce six cranes at the upcoming Bauma Trade Show in Munich, Germany in April.
Share Price Performance
Shares of the company have outperformed the industry it belongs to year to date. The stock has gained around 10% year to date compared with the industry's growth of 4.0%.
Zacks Rank & Stocks to Consider
Manitowoc currently carries a Zacks Rank #3 (Hold).
DMC Global has a long-term earnings growth rate of 20%. The stock has risen 37% year to date.
CECO has a long-term earnings growth rate of 15%. The company’s shares have gained around 11% so far this year.
Grainger has a long-term earnings growth rate of 12.4%. Its shares have moved up 2% year to date.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Strong Order Flow to Drive Manitowoc Amid High Input Costs
On Mar 26, we issued an updated research report on The Manitowoc Company, Inc. (MTW - Free Report) . Product innovation and rise in orders will continue to be growth drivers for the company. Also, its focus on cost control and pricing actions will help counter input cost inflation.
Let's analyze the factors in detail.
Solid Order Growth Instils Optimism
Orders totaled $1,910.7 million in 2018, marking a year-over-year increase of 3%. This increase can be attributed to new products and favorable market conditions. In the Americas, demand is being led by commercial construction and energy end markets. The North American oil and gas environment continues to improve with investment in upstream well completions, continuing to drive crane utilization and replacement demand.
Manitowoc’s backlog totaled $670.6 million as of Dec 31, 2018, marking an increase of 11% from backlog of $606.6 million at the end of the prior year. This can primarily be attributed to improved demand in the U.S. markets. Currently, over 75% of the year-end backlog is scheduled to ship in the first half of 2019. This provides improved revenue visibility for the year.
The company’s revenue guidance for 2019 is at $1.85-$1.95 billion. Compared with revenues of $1.85 billion in 2018, the mid-point of the guidance reflects year-over-year growth of 3%. It also provided EBITDA guidance at $125-$145 million for 2019. The mid-point of the guidance projects year-over-year growth of 16%. Manitowoc also expects capital expenditure of $35 million for the current year.
The Zacks Consensus Estimate for revenues for 2019 is pinned at $1.91 billion, projecting year-over-year growth of 3%. The Zacks Consensus Estimate for earnings is pegged at $1.31, projecting impressive growth of 105%.
Pricing Actions, Cost Control to Negate Impact of Tariffs
Incremental input costs will continue to impact margins in the near term primarily due to the imposition of tariffs on steel imports. Further, supply-chain challenges continue to be a headwind. Fluctuating foreign exchange rates are weighing on Manitowoc's margins, particularly on cranes produced in Europe that it sells in the United States.
The company continues to execute the strategy to cover cost inflation through pricing actions. Further, it remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste. It has also been taking aggressive steps to support supply-chain partners to ensure timely delivery of components.
Innovation — A Key Catalyst
Manitowoc’s aftermarket sales in 2018 were up 8%. Growth primarily stemmed from higher-margin parts and services. The company remains focused on improving this crucial part of the business. Further, it noted that there is scope of increasing revenues from the Middle East. It continues to strengthen ties with channel partners in the region to capitalize on the recovery in markets.
The company’s focus on innovation will continue to aid in leading the industry by providing differentiated products that add value to customers. It introduced the tower crane at Bauma, China, called the MCT 565 for the Asia market. Following the positive response, the company is now developing an entire range of tower cranes in China for the Asia market, which will enable it to grow organically in the region. Manitowoc is set to introduce six cranes at the upcoming Bauma Trade Show in Munich, Germany in April.
Share Price Performance
Shares of the company have outperformed the industry it belongs to year to date. The stock has gained around 10% year to date compared with the industry's growth of 4.0%.
Zacks Rank & Stocks to Consider
Manitowoc currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector include DMC Global Inc. (BOOM - Free Report) , CECO Environmental Corp. and W.W. Grainger, Inc. (GWW - Free Report) . All these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DMC Global has a long-term earnings growth rate of 20%. The stock has risen 37% year to date.
CECO has a long-term earnings growth rate of 15%. The company’s shares have gained around 11% so far this year.
Grainger has a long-term earnings growth rate of 12.4%. Its shares have moved up 2% year to date.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>