Altra Industrial Motion Corp. gains from solid product offerings, diversified business structure, innovation capabilities and pricing actions. However, the company’s momentum is subdued due to the presence of challenges in certain end markets. It presently carries a Zacks Rank #5 (Strong Sell).
Notably, the company is a specialist in making and distributing various motion control, automation and electromechanical power transmission products. It is based in Braintree, MA. The company currently has a market capitalization of $3.7 billion.
It belongs to the Zacks Manufacturing - General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the bottom 35% (with a rank of 164) of more than 250 Zacks industries.
In the past three months, Altra Industrial’s shares have declined 9.8% compared with the industry’s growth of 84.1%.
Below we have discussed why it is better to avoid investing in Altra Industrial stock now.
End-Market Challenges: The company expects that softness in the automotive and manufacturing industries might impact the demand for products in markets like oil & gas, mining, and metals. Further, weakness in commercial aerospace might be concerning for its performance.
Other Headwinds: Altra Industrial expects that a sequential rise in selling, general and administrative expenses might be concerning in the quarters ahead. Also, supply-chain issues might be a problem for its business in the renewable energy market.
High capital spending due mainly to increased investments in automation initiatives and boost technology might pressure financial resources. For 2021, the company expects a capital expenditure of $45-$50 million, higher than the $33.7 million reported in 2020.
Risks Regarding International Operations: The company operates in multiple geographical locations, including Europe, the Middle East, Africa, the Asia Pacific and the Americas. Due to such geographical presence, it is exposed to risks arising from unfavorable movements in foreign currencies, geopolitical issues and others.
In fourth-quarter 2020, the company’s sales were down 4.4% in North America and 5.7% in Europe.
Earnings Estimate Trend: In the past 60 days, its earnings estimates have been lowered, reflecting bearish sentiments for its prospects. Notably, the Zacks Consensus Estimate for earnings is pegged at 77 cents for the first quarter of 2021 and 79 cents for the second quarter of 2021, suggesting declines of 4.9% and 4.8% from the respective 60-day-ago figures.
For both quarters, there is one downward revision in estimates.
Also, the estimate for 2021 is pegged at $3.13, reflecting a 6% decline from the 60-day-ago figure. Notably, two downward revisions have been recorded in the past couple of months.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
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Altra Industrial Motion Corp. gains from solid product offerings, diversified business structure, innovation capabilities and pricing actions. However, the company’s momentum is subdued due to the presence of challenges in certain end markets. It presently carries a Zacks Rank #5 (Strong Sell).
Notably, the company is a specialist in making and distributing various motion control, automation and electromechanical power transmission products. It is based in Braintree, MA. The company currently has a market capitalization of $3.7 billion.
It belongs to the Zacks Manufacturing - General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the bottom 35% (with a rank of 164) of more than 250 Zacks industries.
In the past three months, Altra Industrial’s shares have declined 9.8% compared with the industry’s growth of 84.1%.
Below we have discussed why it is better to avoid investing in Altra Industrial stock now.
End-Market Challenges: The company expects that softness in the automotive and manufacturing industries might impact the demand for products in markets like oil & gas, mining, and metals. Further, weakness in commercial aerospace might be concerning for its performance.
Other Headwinds: Altra Industrial expects that a sequential rise in selling, general and administrative expenses might be concerning in the quarters ahead. Also, supply-chain issues might be a problem for its business in the renewable energy market.
High capital spending due mainly to increased investments in automation initiatives and boost technology might pressure financial resources. For 2021, the company expects a capital expenditure of $45-$50 million, higher than the $33.7 million reported in 2020.
Risks Regarding International Operations: The company operates in multiple geographical locations, including Europe, the Middle East, Africa, the Asia Pacific and the Americas. Due to such geographical presence, it is exposed to risks arising from unfavorable movements in foreign currencies, geopolitical issues and others.
In fourth-quarter 2020, the company’s sales were down 4.4% in North America and 5.7% in Europe.
Earnings Estimate Trend: In the past 60 days, its earnings estimates have been lowered, reflecting bearish sentiments for its prospects. Notably, the Zacks Consensus Estimate for earnings is pegged at 77 cents for the first quarter of 2021 and 79 cents for the second quarter of 2021, suggesting declines of 4.9% and 4.8% from the respective 60-day-ago figures.
For both quarters, there is one downward revision in estimates.
Also, the estimate for 2021 is pegged at $3.13, reflecting a 6% decline from the 60-day-ago figure. Notably, two downward revisions have been recorded in the past couple of months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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