The Manitowoc Company Inc. ( MTW Quick Quote MTW - Free Report) is well-poised for growth on the back of improving demand, robust backlog levels, and its ongoing cost control and productivity improvement measures. Acquisitions and efforts to grow its aftermarket business and product innovation are other catalysts. The company currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see . the complete list of today’s Zacks #1 Rank stocks here Let's delve deeper into the factors that make Manitowoc a compelling investment option at the moment. Solid Q2 Performance
Manitowoc reported second-quarter 2021 earnings of 60 cents, that marked a turnaround from the year-ago quarter’s loss of 47 cents per share, courtesy of better-than-expected demand for its products. The bottom line beat the Zacks Consensus Estimate of 9 cents by a wide margin of 567%. The company has a trailing four-quarter earnings surprise of 23.8%, on average.
Robust Backlog Levels Supports 2021 View
Orders in the second quarter of 2021 soared 126% year over year to around $537 million — a level last witnessed in the first quarter of 2018. Backlog of $736 million at the end of the quarter was the highest seen in the last three years. Backed by the ongoing strength in order intake and backlog, Manitowoc expects revenues of $1.775-$1.825 billion for 2021. Adjusted EBITDA is 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.
Impressive Price Performance Image Source: Zacks Investment Research
Shares of the company have soared 149.4% in the past year, compared with the
industry’s growth of 39.5%. Upbeat Growth Projections
The Zacks Consensus Estimate for Manitowoc’s fiscal 2021 earnings per share is currently pegged at 75 cents, indicating a turnaround from a loss of 35 cents reported in 2020. The same for fiscal 2022 stands at $1.48, suggesting year-over-year improvement of around 98%. The estimates for 2021 and 2022 have moved up 63% and 25%, respectively, over the past 60 days.
The stock has an estimated long-term earnings growth rate of 10%. 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 expand 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. ( HEES Quick Quote HEES - Free Report) . 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 recently acquired all the assets of Aspen Equipment Company for $51 million. This buyout will enhance Manitowoc’s footprint in Nebraska, Iowa and Minnesota, and provide after sales services to a diversified end market. Aspen’s aftermarket business will supplement the buyout of the crane business of H&E Equipment Services.
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.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are
Encore Wire Corporation ( WIRE Quick Quote WIRE - Free Report) and Lincoln Electric Holdings, Inc. ( LECO Quick Quote LECO - Free Report) , both of which sport 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%. Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.