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Manitowoc (MTW) Soars 99% YTD: Will the Rally Continue?

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Shares of The Manitowoc Company Inc. (MTW - Free Report) have been gaining this year, aided by the ongoing improvement in order levels and backlog as well as better-than-expected second-quarter 2021 results and an upbeat outlook for the year. The announcement of entering an agreement to acquire the crane business of H&E Equipment Services, Inc. (HEES - Free Report) added to the upside. The U.S Senate recently passing the $1-trillion infrastructure bill has also worked in favor of the company as the expected perked-up investment in roads, bridges, airports and waterways represents a huge opportunity for the company in the days ahead.

Manitowoc’s shares have surged 99.5% year to date compared with the industry’s growth of 20.9%. With a market capitalization of $929 million, the average volume of shares traded in the last three months was 262.92k.

The company has a trailing four-quarter earnings surprise of 23.8%, on average. Earnings estimates for the Milwaukee, WI-based company for 2021 and 2022 have moved up 25.2% and 20.7%, respectively, in the past 30 days. The positive trend signifies bullish analyst sentiment and justifies the company’s Zacks Rank #2 (Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Factors Driving Growth

Solid Q2 Results: Manitowoc reported second-quarter 2021 earnings of 60 cents that beat the Zacks Consensus Estimate of 9 cents by a whopping 567%. It also marked a turnaround from the year-ago quarter’s loss of 47 cents per share, attributed to strong product demand.

Strong Order Levels: Orders in the second quarter of 2021 increased 126% year over year to around $537 million — a level last witnessed in the first quarter of 2018. Backlog at the end of the quarter was the highest seen in the last three years at $736 million. Order levels are likely to improve in 2021, backed by the ongoing economic recovery and stimulus packages enacted by many countries.

Upbeat 2021 Guidance: Manitowoc expects revenues of $1.775-$1.825 billion for 2021. Adjusted EBITDA is now anticipated between $105 million and $115 million. The mid-points of the revenue and EBITDA guidance ranges indicate growth of 25% and 32%, respectively, from the prior-year levels.

Strategies to Grow Business in Place: The company’s focus on innovation will continue to aid it in leading the industry by providing differentiated products that add value to customers. Its aftermarket business continues to perform well and the company is taking steps to grow the business.

In sync with this, Manitowoc recently announced that it entered a definitive agreement to acquire the crane business of H&E Equipment Services, Inc. Subject to customary closing conditions and regulatory approvals, the transaction is expected to close in the fourth quarter of 2021. The buyout will expand Manitowoc’s ability to provide rentals, new sales, used sales, aftermarket parts, and service to a variety of end-market customers.

The company remains focused on cash preservation and balance sheet management, while funding critical programs for growth. Manitowoc’s total debt-to-total capital ratio was at 0.32 as of Jun 30, 2021, much lower than the industry’s 0.69. It continues to evaluate acquisition opportunities to accelerate product development programs in its all-terrain product line.

Manitowoc is scaling up its China tower crane business. The tower crane market in China is the largest tower crane market in the world. The company plans to spend $15 million this year to expand its tower crane rental fleet in Europe. In all-terrain cranes, the company has the latest models lined up for launch at Bauma, the world's leading construction machinery trade fair in 2022.

Stocks to Consider

Investors interested in the Industrial Products sector can also consider other top-ranked stocks like Encore Wire Corporation (WIRE - Free Report) and Lindsay Corporation (LNN - Free Report) . Both companies carry a Zacks Rank #1 at present.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Lindsay has an estimated earnings growth rate of 17.3% for the ongoing year. The company’s shares have risen 35% so far this year.