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John Bean (JBT) Counts on FoodTech Unit Amid AeroTech Weakness
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On May 17, we issued an updated research report on John Bean Technologies Corporation (JBT - Free Report) . The company’s FoodTech segment has been benefiting from higher demand for packaged food purchases and "eat-at-home" trend amid the pandemic. Focus on process optimization efforts and cost-cutting actions will aid margins. In the AeroTech segment, mobile equipment demand is bearing the brunt of low passenger air travel. Nevertheless, demand for infrastructure, cargo and military remain promising.
Improving Orders Bode Well
In first-quarter 2021, orders increased 3% compared with the prior-year quarter to $486 million. Orders in the JBT FoodTech segment climbed 22.2% year over year to a record $386 million. The segment also witnessed a surge of 24% in the backlog. Notably, the segment has been witnessing sequential improvement in order levels over the past three quarters.
Due to the pandemic, the food industry has experienced a surge in retail demand driven by packaged food purchases and positive recovery for certain customers across the food industry, specifically those in the quick service restaurant drive-through businesses and others servicing the sustained "eat-at-home" trend. This is anticipated to continue in 2021, which bodes well for the FoodTech segment. In AeroTech segment, while mobile equipment demand remains low, demand for infrastructure, cargo and military remain promising.
Upbeat 2021 Guidance
John Bean projects adjusted earnings per share to lie between $4.40 and $4.60 for 2021, up from the prior projection of $4.30-$4.55. The mid-point of the range suggests growth of 14% from 2020.
Cost Reduction to Drive Margins
John Bean has been delivering strong EBITDA margin performance despite significant decline in revenues amid the pandemic. This can be attributed to the company’s recent process optimization efforts and JBT Operating System discipline, and rapid implementation of cost-cutting actions. In third-quarter 2020, the company implemented a restructuring plan for manufacturing capacity rationalization affecting both FoodTech and AeroTech segments. These restructuring actions are expected generate incremental cost savings of $5 million during 2021.
Also, John Bean’s Elevate plan is likely to drive continued growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance yield and productivity.
Concerted Efforts to Grow Business
John Bean intends to ramp up initiatives that were previously underway to bring automation solutions to the protein market. In addition, Liquid Foods’ end products such as juice, canned foods and ready meals continue to witness high retail demand. The protein market has a total estimated market size of $18 billion. The Liquid food market has a worth of $8 billion. The company has ample scope to grow in both markets.
The company is also capitalizing on its extensive installed base to expand recurring revenues (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. In AeroTech, the company plans to continue developing advanced military product offerings and customer support capabilities to service global military customers.
Solid Acquisition Strategy
John Bean has a strategic acquisition program focused on companies that add complementary products, which enable it to offer more comprehensive solutions to customers. In the last few years, the company acquired Proseal UK Limited, Prime Equipment Group and certain assets and liabilities of MARS Food Processing Solutions. The latest buyout of AutoCoding Systems will fortify John Bean’s abilities in the growing global market for in-line coding and inspection solutions that include hardware and software for pharmaceutical, food & beverage, and nutraceutical customers.
Impact of Pandemic on Certain Markets a Woe
Pandemic has impacted demand for food service due to reduced restaurant, travel and school activity. This will remain a drag on the FoodTech segment. For AeroTech, a large portion of the business is dependent on the passenger airline industry. Passenger air travel has been severely disrupted by the pandemic globally. This, in turn, impacted the company’s mobile equipment and airport services business.
Share Price Performance
The stock has gained 8.5% in the past three months, compared with the industry’s growth of 5.5%.
Zacks Rank & Stocks to Consider
John Bean currently carries a Zacks Rank #3 (Hold).
Deere & Company has a projected earnings growth rate of 84.3% for fiscal 2021. Over the past year, the company’s shares have appreciated 16% over the past three months.
AGCO Corporation has an estimated earnings growth rate of 54.6% for the ongoing year. The company’s shares have gained 21% in the past three months.
Caterpillar has an expected earnings growth rate of 47.3% for 2021. Over the past month, the stock has climbed 17% in the past three months.
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John Bean (JBT) Counts on FoodTech Unit Amid AeroTech Weakness
On May 17, we issued an updated research report on John Bean Technologies Corporation (JBT - Free Report) . The company’s FoodTech segment has been benefiting from higher demand for packaged food purchases and "eat-at-home" trend amid the pandemic. Focus on process optimization efforts and cost-cutting actions will aid margins. In the AeroTech segment, mobile equipment demand is bearing the brunt of low passenger air travel. Nevertheless, demand for infrastructure, cargo and military remain promising.
Improving Orders Bode Well
In first-quarter 2021, orders increased 3% compared with the prior-year quarter to $486 million. Orders in the JBT FoodTech segment climbed 22.2% year over year to a record $386 million. The segment also witnessed a surge of 24% in the backlog. Notably, the segment has been witnessing sequential improvement in order levels over the past three quarters.
Due to the pandemic, the food industry has experienced a surge in retail demand driven by packaged food purchases and positive recovery for certain customers across the food industry, specifically those in the quick service restaurant drive-through businesses and others servicing the sustained "eat-at-home" trend. This is anticipated to continue in 2021, which bodes well for the FoodTech segment. In AeroTech segment, while mobile equipment demand remains low, demand for infrastructure, cargo and military remain promising.
Upbeat 2021 Guidance
John Bean projects adjusted earnings per share to lie between $4.40 and $4.60 for 2021, up from the prior projection of $4.30-$4.55. The mid-point of the range suggests growth of 14% from 2020.
Cost Reduction to Drive Margins
John Bean has been delivering strong EBITDA margin performance despite significant decline in revenues amid the pandemic. This can be attributed to the company’s recent process optimization efforts and JBT Operating System discipline, and rapid implementation of cost-cutting actions. In third-quarter 2020, the company implemented a restructuring plan for manufacturing capacity rationalization affecting both FoodTech and AeroTech segments. These restructuring actions are expected generate incremental cost savings of $5 million during 2021.
Also, John Bean’s Elevate plan is likely to drive continued growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance yield and productivity.
Concerted Efforts to Grow Business
John Bean intends to ramp up initiatives that were previously underway to bring automation solutions to the protein market. In addition, Liquid Foods’ end products such as juice, canned foods and ready meals continue to witness high retail demand. The protein market has a total estimated market size of $18 billion. The Liquid food market has a worth of $8 billion. The company has ample scope to grow in both markets.
The company is also capitalizing on its extensive installed base to expand recurring revenues (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. In AeroTech, the company plans to continue developing advanced military product offerings and customer support capabilities to service global military customers.
Solid Acquisition Strategy
John Bean has a strategic acquisition program focused on companies that add complementary products, which enable it to offer more comprehensive solutions to customers. In the last few years, the company acquired Proseal UK Limited, Prime Equipment Group and certain assets and liabilities of MARS Food Processing Solutions. The latest buyout of AutoCoding Systems will fortify John Bean’s abilities in the growing global market for in-line coding and inspection solutions that include hardware and software for pharmaceutical, food & beverage, and nutraceutical customers.
Impact of Pandemic on Certain Markets a Woe
Pandemic has impacted demand for food service due to reduced restaurant, travel and school activity. This will remain a drag on the FoodTech segment. For AeroTech, a large portion of the business is dependent on the passenger airline industry. Passenger air travel has been severely disrupted by the pandemic globally. This, in turn, impacted the company’s mobile equipment and airport services business.
Share Price Performance
The stock has gained 8.5% in the past three months, compared with the industry’s growth of 5.5%.
Zacks Rank & Stocks to Consider
John Bean currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Deere & Company (DE - Free Report) , AGCO Corporation (AGCO - Free Report) and Caterpillar Inc. (CAT - Free Report) . All of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Deere & Company has a projected earnings growth rate of 84.3% for fiscal 2021. Over the past year, the company’s shares have appreciated 16% over the past three months.
AGCO Corporation has an estimated earnings growth rate of 54.6% for the ongoing year. The company’s shares have gained 21% in the past three months.
Caterpillar has an expected earnings growth rate of 47.3% for 2021. Over the past month, the stock has climbed 17% in the past three months.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>