Altra Industrial Motion Corp. (AIMC - Free Report) seems to have lost its sheen to challenging end-market conditions and other company-specific headwinds. The manufacturer of mechanical power transmission components currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company belongs to the Zacks Manufacturing – General Industrial industry, currently at the bottom 37% (with the rank of 161) of more than 250 Zacks industries. We believe that the industry is suffering from adverse impacts of global uncertainties, unfavorable movements in foreign currencies, softness in the housing market and weakness in industrial production in the United States. Cost escalation due to tariff-related woes as well as commodity inflation, and high labor costs and freight charges are other concerns.
It is worth mentioning here that the company reported weaker-than-expected results for second-quarter 2019, with earnings lagging estimates by 10.13%. On a year-over-year basis, earnings declined 9%.
Altra Industrial’s shares have lost nearly 19.3% in the past three months compared with the industry’s growth of 1.7% and against the Zacks Industrial Products sector’s decline of 2.6%. The S&P 500 witnessed growth of 2.5% during the same period. Its earnings estimates were lowered, reflecting bearish sentiments.
Headwinds Creating Trouble for Altra Industrial
Top and Bottom-Line Weakness: The company believes that mixed end-market conditions, which it witnessed in the second quarter, will be concerning for the remainder of 2019. Notably, energy, medical equipment, mining and defense markets showed impressive performance in the second quarter. However, transportation suffered from issues in the heavy-duty truck market and results in factory automation & specialty machinery, agriculture, metals, distribution, turf & garden markets, and oil & gas markets were soft too.
These apart, global uncertainties and other headwinds (as detailed in other points mentioned below) have made Altra Industrial revise down projections. For 2019, the company now predicts sales to be $1,850-$1,880 million versus the previously stated $1,920-$1,950 million and non-GAAP earnings are expected to be $2.81-$2.97 per share, down from $3.02-$3.18 mentioned earlier.
In the past 60 days, the Zacks Consensus Estimate for the company’s earnings has declined 7% to $2.92 for 2019 and 9.1% to $3.21 for 2020.
Altra Industrial Motion Corp. Price and Consensus