On Dec 21, we issued an updated research report on The Manitowoc Company, Inc.
(MTW - Free Report
) . Product innovation, growth in orders, focus on cost control and pricing actions will remain primary catalysts for this manufacturer of cranes despite input cost inflation and weakness in rough terrain markets.
Let's analyze the factors in detail.
Poised to Deliver Improved 2018 Results Despite Headwinds
The general crane market is displaying signs of improvement as evident from the recent improvement in Manitowoc’s order activity. Orders were pegged at $458 million in the third quarter, up 13% year over year driven by new products and favorable market conditions. Further, backlog at the end of the quarter came in at $700 million, up 50% from the prior-year quarter.
In Americas, demand is being led by the commercial construction and energy end markets. The North American oil and gas environment continues to improve with investment in upstream well completions continuing to drive crane utilization and replacement demand. In Asia Pacific, growth is being driven by India, Australia, and China. The company also noted overall stable demand in Europe, with moderating demand in Western Europe. This will offset weakness in the Middle East markets owing to geopolitical uncertainties and market competitions. Rough terrain markets have turned positive but still remains well below historical highs. In fact, Manitowoc does not anticipate a substantial increase in rough terrain markets in the near term.
Consequently, the company raised full-year 2018 revenue guidance to $1.80-$1.83 billion from $1.78-$1.85 billion, indicating growth of 15% at the mid-point year over year. The company affirmed 2018 adjusted EBITDA guidance of $105-$115 million.
The Zacks Consensus Estimate for revenues for fiscal 2018 is $1.82 billion, projecting year-over-year growth of 15%. The Zacks Consensus Estimate for earnings per share is pegged at 55 cents, projecting growth of 312%.
Pricing Actions, Cost Control to Negate Impact of Tariffs
Incremental input costs will continue to impact margins in the near term, primarily due to the imposition of the tariffs on steel imports. Further, supply chain challenges continue to be a headwind. Fluctuating foreign exchange rates are weighing on Manitowoc's margins, particularly on the European-produced cranes that it sells in the United States.
Manitowoc continues to execute its strategy to cover cost inflation through pricing actions. Further, the company remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste. It has also been taking aggressive steps to support supply-chain partners to ensure timely delivery of components.
Share Price Performance
Shares of Manitowoc have lost around 65% over the past year, compared with the industry
's decline of around 25%.
Zacks Rank & Key Picks
Manitowoc currently carries a Zacks Rank #3 (Hold).
DMC Global has a long-term earnings growth rate of 20%. The stock has surged 55% in a year’s time.
CECO has a long-term earnings growth rate of 15%. The company’s shares have gained around 34% during the past year.
Grainger has a long-term earnings growth rate of 12.4%. Its shares have been up 16% in the past year.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.