We issued an updated research report on Altra Industrial Motion Corporation (AIMC - Free Report) on May 31.
This machinery company currently carries a Zacks Rank #2 (Buy), a revision from its earlier Zacks Rank #3 (Hold). Its market capitalization is approximately $1.2 billion.
Let’s delve deeper and discuss why investors should consider adding Altra Industrial’s stock to their portfolio.
Share Price Performance, Earnings Estimates: Altra Industrial’s financial performance was better than expected in three of the last four quarters. Average earnings surprise was a positive 5.06%, including the impact of 8.20% earnings beat recorded for first-quarter 2018. Also, as disclosed on Apr 27, the company’s revenues for the first quarter surpassed the Zacks Consensus Estimate by 3.1%.
In the last month, Altra Industrial’s shares have yielded a return of 2.4%, outperforming 1.8% increase recorded by the industry.
Moreover, on a year-over-year basis, the company’s Zacks Consensus Estimate is predicted to grow 19.5% to $2.45 for 2018 and 9.9% to $2.69 for 2019. Also, the estimate of 2018 has increased 0.8% over the tally 60 days ago.
Solid Product Portfolio: Altra Industrial’s solid product portfolio — including brands like Lamiflex Couplings, Industrial Clutch, Stromag, Boston Gear, Twiflex and many more — as well as its efforts to innovate products and accentuate customer satisfaction will be a boon. Among newly-launched products, small brakes for servomotors (applied in surgical robots), devices to manage airflow (in an air-handling system) and clutches for pressure pump transmission are worth mentioning.
Near- and Long-Term Growth Potential Solid: For 2018, healthy industrial economy, solid bookings in the majority of end markets and synergistic gains from acquired assets are anticipated to drive Altra Industrial’s performance. Sales in the year are anticipated to be $910-$930 million while non-GAAP earnings are predicted to be $2.36-$2.49 per share. These projections are higher than the year-ago sales figure of $876.7 million and non-GAAP earnings per share of $2.05.
Over the long term, Altra Industrial anticipates revenue growth to be in excess of the Gross Domestic Product while it aims to improve its operating margin by 150 basis points on strategic pricing.
Strategic Initiatives: Over time, Altra Industrial acquired meaningful businesses to expand its product offerings and geographical reach. The buyout of Stromag in December 2016 is worth mentioning here. Also, in March 2018, the company agreed to combine its operations with four companies of Automation and Specialty business of Fortive Corporation (FTV - Free Report) . The combined business will be a global leader in motion control and power transmission, and will have greater access to end-markets, solid product offering for customers and better technological expertise. Its combined revenues will be $1.8 billion. Earnings per share accretion are anticipated immediately.
Other Stocks to Consider
Other stocks worth considering in the industry are Twin Disc, Incorporated (TWIN - Free Report) and Graco Inc. (GGG - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last 60 days, earnings estimates for these two stocks improved for the current year and the next year. Also, average positive earnings surprise for the last four quarters was 250.43% for Twin Disc and 12.81% for Graco.
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