We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
John Bean Bets on Strategic Initiatives Amid Low Orders
Read MoreHide Full Article
On Mar 12, 2020, we issued an updated research report on John Bean Technologies (JBT - Free Report) . The company is poised to gain on strategic acquisition program and focus on developing innovative products and services. Growing the aftermarket business also bodes well. However, lower order rates thanks to current general economic and trade uncertainties, and the impact of the coronavirus outbreak will weigh on near-term results.
Coronavirus to Impact 2020 Results
John Bean anticipates revenue growth of 3-4% for the current year. It includes organic growth of 1% and acquisitions growth of 3%, with a foreign currency headwind of 0-1%. Adjusted EPS is anticipated between $5.15 and $5.35. The mid-point of the guided range indicates growth of 6% from $4.96 in 2019.
At FoodTech segment, the general economic and trade uncertainties have impacted the decision-making process among customers as evident from the 2% drop in the segment’s order rates in 2019. Further, the potential impact of coronavirus outbreak on supply chain and general business disruptions could act as a headwind. AeroTech segment’s near-term results are likely to be impacted as the airlines industry has been bearing the brunt of the coronavirus outbreak. Further, the company’s results will be affected by the lockdown in Italy. Notably, Europe accounts for about 20% of John Bean’s sales.
The imposition of tariffs on imports from China has led to input cost inflation, which will continue to put pressure on the company’s margins. Further, John Bean projects interest expense for 2020 in the range of $22-$23 million, up from $18.8 million in 2019. This reflects the impact of incremental acquisition related debt and will impact earnings.
Poised Well on Elevate Plan
John Bean’s Elevate plan is likely to drive persistent growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance their yield and productivity.
The company is capitalizing on its extensive installed base to expand recurring revenues (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. This portion of the business has been seeing a CAGR of 9% over the past three years. In fact, it has further room for growth and will contribute to margins.
Solid Acquisition Strategy
John Bean has a strategic acquisition program focused on companies that add complementary products, which enable it to offer more comprehensive solutions to customers, and meet strict economic criteria for returns and synergies. In sync with this, it completed the acquisitions of Proseal UK Limited, a leading provider of tray sealing technology, and Prime Equipment Group, Inc., a manufacturer of turnkey primary and water re-use solutions to the poultry industry.
The acquisition of Prime advances the company’s goal of becoming the preferred provider of full-line solutions for poultry customers. The buyouts together are expected to add revenues $140-150 million in 2020.
Restructuring Efforts to Yield Savings
The company’s ongoing restructuring plan will help improve effectiveness and productivity in all business units. The restructuring plan has helped lift the company’s adjusted EBITDA margins from 12% to 15%. In 2019, the company generated incremental savings of $28 million. The company anticipates generating savings worth $20 million in 2020 and is on track to achieve its total program savings target of $55 million.
Price Performance
John Bean’s shares have fallen 25.6% over the past year compared with the industry’s decline of 12.2%.
Zacks Rank & Stocks to Consider
John Bean currently carries a Zacks Rank #3 (Hold).
Sharps Compliance has an estimated earnings growth rate of 800% for the ongoing year. In a year’s time, the company’s shares have gained 32%.
Tetra Tech has an estimated earnings growth rate of 10.7% for the ongoing year. In a year’s time, the company’s shares have gained 3%.
Cintas has a projected earnings growth rate of 15.7% for 2020. The company’s shares have rallied 10% over the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
John Bean Bets on Strategic Initiatives Amid Low Orders
On Mar 12, 2020, we issued an updated research report on John Bean Technologies (JBT - Free Report) . The company is poised to gain on strategic acquisition program and focus on developing innovative products and services. Growing the aftermarket business also bodes well. However, lower order rates thanks to current general economic and trade uncertainties, and the impact of the coronavirus outbreak will weigh on near-term results.
Coronavirus to Impact 2020 Results
John Bean anticipates revenue growth of 3-4% for the current year. It includes organic growth of 1% and acquisitions growth of 3%, with a foreign currency headwind of 0-1%. Adjusted EPS is anticipated between $5.15 and $5.35. The mid-point of the guided range indicates growth of 6% from $4.96 in 2019.
At FoodTech segment, the general economic and trade uncertainties have impacted the decision-making process among customers as evident from the 2% drop in the segment’s order rates in 2019. Further, the potential impact of coronavirus outbreak on supply chain and general business disruptions could act as a headwind. AeroTech segment’s near-term results are likely to be impacted as the airlines industry has been bearing the brunt of the coronavirus outbreak. Further, the company’s results will be affected by the lockdown in Italy. Notably, Europe accounts for about 20% of John Bean’s sales.
The imposition of tariffs on imports from China has led to input cost inflation, which will continue to put pressure on the company’s margins. Further, John Bean projects interest expense for 2020 in the range of $22-$23 million, up from $18.8 million in 2019. This reflects the impact of incremental acquisition related debt and will impact earnings.
Poised Well on Elevate Plan
John Bean’s Elevate plan is likely to drive persistent growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance their yield and productivity.
The company is capitalizing on its extensive installed base to expand recurring revenues (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. This portion of the business has been seeing a CAGR of 9% over the past three years. In fact, it has further room for growth and will contribute to margins.
Solid Acquisition Strategy
John Bean has a strategic acquisition program focused on companies that add complementary products, which enable it to offer more comprehensive solutions to customers, and meet strict economic criteria for returns and synergies. In sync with this, it completed the acquisitions of Proseal UK Limited, a leading provider of tray sealing technology, and Prime Equipment Group, Inc., a manufacturer of turnkey primary and water re-use solutions to the poultry industry.
The acquisition of Prime advances the company’s goal of becoming the preferred provider of full-line solutions for poultry customers. The buyouts together are expected to add revenues $140-150 million in 2020.
Restructuring Efforts to Yield Savings
The company’s ongoing restructuring plan will help improve effectiveness and productivity in all business units. The restructuring plan has helped lift the company’s adjusted EBITDA margins from 12% to 15%. In 2019, the company generated incremental savings of $28 million. The company anticipates generating savings worth $20 million in 2020 and is on track to achieve its total program savings target of $55 million.
Price Performance
John Bean’s shares have fallen 25.6% over the past year compared with the industry’s decline of 12.2%.
Zacks Rank & Stocks to Consider
John Bean currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Sharps Compliance Corp , Tetra Tech, Inc. (TTEK - Free Report) and Cintas Corporation (CTAS - Free Report) . While Sharps Compliance Corp sports a Zacks Rank #1 (Strong Buy), Tetra Tech and Cintas carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Sharps Compliance has an estimated earnings growth rate of 800% for the ongoing year. In a year’s time, the company’s shares have gained 32%.
Tetra Tech has an estimated earnings growth rate of 10.7% for the ongoing year. In a year’s time, the company’s shares have gained 3%.
Cintas has a projected earnings growth rate of 15.7% for 2020. The company’s shares have rallied 10% over the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>