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Bear of the Day: Manitowoc (MTW)

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The Manitowoc Company (MTW - Free Report) is still stuck in the downward spiral of the mobile crane business. This Zacks Rank #5 (Strong Sell) does not see an end to the challenging market conditions yet.

Manitowoc makes cranes and lift solutions in 20 countries. Headquartered in Wisconsin, it provides crawler cranes, tower cranes and mobile cranes for the heavy construction industry.

In 2015, half of its revenue was generated outside of the United States.

A Miss in the Third Quarter

On Nov 1, Manitowoc reported its third quarter results but it had already released its preliminary numbers earlier.

Even with releasing the preliminary numbers, it still missed on the Zacks Consensus Estimate by 2 cents. Earnings were a loss of $0.28 compared to the Zacks Consensus Estimate of a loss of $0.26.

Sales fell to $349.8 million from $438.2 million in the third quarter last year. The decline was primarily due to continued deterioration in the mobile crane markets, mostly in North America and the Middle East.

In better news, tower cranes are seeing growth due to residential and commercial construction trends, especially in Western Europe.

But that's not enough to stabilize the earnings picture.

2016 and 2017 Estimates Cut Again

The near term outlook is still grim. 8 estimates were cut since the earnings report which has pushed the 2016 Zacks Consensus Estimate down to a loss of $0.40 from a loss of $0.29.

This is an earnings decline of 157% from 2015 where the company managed to earn $0.70 but that also included its commercial food service business which was spun-off.

Orders remain on the downward track. Third quarter orders fell 8% year over year due to continued softness in the North American and Middle East markets.

2017 shows some improvement but the analysts are still expecting a loss. The estimates have been cut for 2017 again and have pushed the Zacks Consensus down to a loss of $0.13.

90 days ago, the analysts were optimistic and expected to see earnings of $0.14.

Tough Time to Invest

With earnings expected to be negative this year and next, there's not a lot of incentive for investors to be in the stock.

The big drop in the shares in the 2-year chart was due to its spin-off of its commercial foodservice supply business, Manitowoc Foodservice.

Manitowoc pays a dividend, currently yielding about 2%, but that's not reason enough to get in at this time.

The entire heavy equipment industry is suffering. However, some of the others, such as Joy Global (JOY), are at least still expected to post positive earnings this year and next, as anemic as those earnings are.

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