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Enerpac Tool (EPAC) to Gain From Products & Demand Amid Pandemic
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We have issued an updated research report on Enerpac Tool Group Corp. (EPAC - Free Report) on Mar 26.
The Menomonee Falls, WI-based company manufactures and distributes various industrial products as well as provides multiple services. The company belongs to the Zacks Manufacturing – Tools & Related Products industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector.
There are a number of factors that are influencing Enerpac Tool’s prospects. A brief discussion on important factors is discussed below:
Product Offerings and Innovation: The company’s solid product portfolio, including connectors for oil & gas, hydraulic torque wrenches, heavy lifting technology solutions, and others, increases its attractiveness among customers. Notably, it has business in energy, mining, industrial, product automation and other end markets.
Also, innovation of products is a priority for the company. In fiscal 2020 (ended August 2020), 22 product families were introduced by Enerpac Tool. Also, three product families in the first quarter and two families in the second quarter were unveiled by the company. It is worth noting here that sales generated from new products accounted for 10% of total revenues generated in both the first and second quarters of fiscal 2021.
Multiple Tailwinds and Projection: In addition to product-related tailwinds, the company is well-positioned to benefit from e-commerce programs and digital marketing. Also, its focus on disposing of non-profitable businesses, invest in growth opportunities and save on costs through permanent and temporary cost actions are proving beneficial.
Anticipating demand improvement and an increase in project activities, the company expects revenues of $280-$290 million for the second half of fiscal 2021 (ending August 2021). This projection suggests a rise from $240.1 million generated in the first half of fiscal 2021. Also, the company anticipates returning to pre-COVID sales level in exiting fiscal 2021.
Long-Term Targets: Enerpac Tool has certain targets set for the long term. Core sales are expected to grow 5% (CAGR) on the back of product innovation, acquisitions, commercial efficiency, market share gains and other tailwinds. Earnings before interest, tax, depreciation and amortization (EBITDA) margin is predicted to be 25%, while free cash conversion will likely be more than 100% of net income. Return on invested capital is expected to be 20% and leverage to be 1.5-2.5X.
Pandemic and Inorganic Activity-Related Woes: The pandemic adversely impacted the company’s demand in second-quarter fiscal 2021 (ended February 2021), as evident from a 11% fall in its core sales in the quarter. Though market demand is gradually improving, the headwinds related to the pandemic will likely be concerning in the near term.
Also, divestments have adversely influenced the company’s performances in the past few quarters. Notably, the impact of divestments (net of acquired assets) lowered sales by 1% in the second quarter of fiscal 2021. Despite long-term benefits, such inorganic actions might continue to adversely impact near-term performance.
Forex Woes: Enerpac Tool carries out its operations in multiple countries, including the United States, Asia, Europe, the Middle East and other regions. International diversification has exposed it to unfavorable movements in foreign currencies, geopolitical issues, local competitive pressure and macroeconomic challenges.
In second-quarter fiscal 2021, the company’s core sales decreased in mid-single digits in Europe, low-single digits in the Asia Pacific, low-double digits in the Americas and low-double digits in the Middle East region.
Other Players
Three other players in the industry are Kennametal Inc. (KMT - Free Report) , Lincoln Electric Holdings, Inc. (LECO - Free Report) and Stanley Black & Decker, Inc. (SWK - Free Report) . Earnings surprise for the last reported quarter was 60.00% for Kennametal, 15.89% for Lincoln Electric and 10.40% for Stanley Black.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Enerpac Tool (EPAC) to Gain From Products & Demand Amid Pandemic
We have issued an updated research report on Enerpac Tool Group Corp. (EPAC - Free Report) on Mar 26.
The Menomonee Falls, WI-based company manufactures and distributes various industrial products as well as provides multiple services. The company belongs to the Zacks Manufacturing – Tools & Related Products industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector.
There are a number of factors that are influencing Enerpac Tool’s prospects. A brief discussion on important factors is discussed below:
Product Offerings and Innovation: The company’s solid product portfolio, including connectors for oil & gas, hydraulic torque wrenches, heavy lifting technology solutions, and others, increases its attractiveness among customers. Notably, it has business in energy, mining, industrial, product automation and other end markets.
Also, innovation of products is a priority for the company. In fiscal 2020 (ended August 2020), 22 product families were introduced by Enerpac Tool. Also, three product families in the first quarter and two families in the second quarter were unveiled by the company. It is worth noting here that sales generated from new products accounted for 10% of total revenues generated in both the first and second quarters of fiscal 2021.
Multiple Tailwinds and Projection: In addition to product-related tailwinds, the company is well-positioned to benefit from e-commerce programs and digital marketing. Also, its focus on disposing of non-profitable businesses, invest in growth opportunities and save on costs through permanent and temporary cost actions are proving beneficial.
Anticipating demand improvement and an increase in project activities, the company expects revenues of $280-$290 million for the second half of fiscal 2021 (ending August 2021). This projection suggests a rise from $240.1 million generated in the first half of fiscal 2021. Also, the company anticipates returning to pre-COVID sales level in exiting fiscal 2021.
Long-Term Targets: Enerpac Tool has certain targets set for the long term. Core sales are expected to grow 5% (CAGR) on the back of product innovation, acquisitions, commercial efficiency, market share gains and other tailwinds. Earnings before interest, tax, depreciation and amortization (EBITDA) margin is predicted to be 25%, while free cash conversion will likely be more than 100% of net income. Return on invested capital is expected to be 20% and leverage to be 1.5-2.5X.
Pandemic and Inorganic Activity-Related Woes: The pandemic adversely impacted the company’s demand in second-quarter fiscal 2021 (ended February 2021), as evident from a 11% fall in its core sales in the quarter. Though market demand is gradually improving, the headwinds related to the pandemic will likely be concerning in the near term.
Also, divestments have adversely influenced the company’s performances in the past few quarters. Notably, the impact of divestments (net of acquired assets) lowered sales by 1% in the second quarter of fiscal 2021. Despite long-term benefits, such inorganic actions might continue to adversely impact near-term performance.
Forex Woes: Enerpac Tool carries out its operations in multiple countries, including the United States, Asia, Europe, the Middle East and other regions. International diversification has exposed it to unfavorable movements in foreign currencies, geopolitical issues, local competitive pressure and macroeconomic challenges.
In second-quarter fiscal 2021, the company’s core sales decreased in mid-single digits in Europe, low-single digits in the Asia Pacific, low-double digits in the Americas and low-double digits in the Middle East region.
Other Players
Three other players in the industry are Kennametal Inc. (KMT - Free Report) , Lincoln Electric Holdings, Inc. (LECO - Free Report) and Stanley Black & Decker, Inc. (SWK - Free Report) . Earnings surprise for the last reported quarter was 60.00% for Kennametal, 15.89% for Lincoln Electric and 10.40% for Stanley Black.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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