We believe that Actuant Corporation (ATU - Free Report) is a solid choice for investors who are seeking exposure in the machinery industry.
The stock, with roughly $1.8 billion market capitalization, was upgraded to a Zacks Rank #1 (Strong Buy) on Jun 23.
Why the Upgrade?
We are providing a snapshot of how Actuant fared in the third quarter of fiscal 2018 (ended May 31, 2018). The company’s earnings of 39 cents per share surpassed the Zacks Consensus Estimate by 8.3%. Net sales went up 7.3% year over year, on the back of healthy performance of Industrial and Engineered Solutions segments. Both core sales and favorable foreign currency movements added 4% to sales growth.
We believe, sound performance in the fiscal third quarter, as well as solid projections for the fourth quarter and fiscal 2018 (ending August 2018), have helped in raising Actuant’s investment appeal. For the fiscal, the company anticipates gaining from higher maintenance activities in the energy end market and its efforts to suppress inflationary situation. Also, product launches help in enhancing the company’s top-line growth prospects. For instance, a new line of chain cutters and a new line of Bottle Jacks were added to the company’s Enerpac product line in the fiscal third quarter.
Sales for fiscal 2018 are now projected to be $1.17-$1.18 billion versus $1.14-$1.16 billion expected earlier. Moreover, earnings projection has been tweaked to $1.03-$1.08 from the previous expectation of $1.00-$1.10, raising the mid-point from $1.05 to $1.06.
Also, Actuant aims at keeping a check on costs through headcount reductions, operational improvements and facility consolidations. In addition, the company’s decision — to move from a three-segment business structure to a two-segment structure by the beginning of fiscal 2019 (ending August 2019) — will help it focus on building a sound industrial tool and component & systems businesses. Furthermore, the company’s inorganic initiatives will be advantageous. In the fiscal third quarter, Actuant acquired Equalizer. This buyout was added to the Industrial segment. It will help in strengthening the company’s channels and engineering talents.
In the past seven days, the company’s earnings estimates for both fiscal 2018 and 2019 (ending August 2019) have been revised upward by six brokerage firms. The Zacks Consensus Estimate is pegged at $1.06 for fiscal 2018 and $1.29 for fiscal 2019, reflecting growth of 2.9% and 4% from the respective seven-day-ago tallies. Also, these estimates reflect year-over-year growth of 27.7% for fiscal 2018 and 21.3% for fiscal 2019.
Actuant Corporation Price and Consensus