John Bean Technologies Corporation ( JBT Quick Quote JBT - Free Report) is poised to gain from focus on developing innovative products and services and expanding the aftermarket business. It is also progressing well on its Elevate plan that aims to drive persistent growth and margin expansion, and strategic acquisition program. Growing demand for protein, beverages and ready-to-eat meals are likely to act as key catalysts in the long haul.
However, impact of the coronavirus outbreak on both the FoodTech and AeroTech segments’ order levels remains a hindrance in the near term. In the past three months, the company’s shares have gained 6.4% compared with the
industry's rally of 26.8%.
The company currently has a Zacks Rank #3 (Hold) and a
VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, make solid investment choices. Earnings Growth: John Bean has delivered an earnings growth rate of 28.5% over the past five years, ahead of the industry’s 4.8%. The company has a long-term estimated earnings growth rate of 5.5%. Earnings Estimate Revisions: The Zacks Consensus Estimate for the company’s current quarter earnings has been revised upward by 3% over the past 30 days to 73 cents per share. The earnings estimate for 2020 and 2021 have moved north 1% and 0.5%, respectively. Positive Earnings Surprise History: John Bean Technologies outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 24.4%. Solid ROE: The company’s ROE of 30.8% is higher than the industry’s 25.9%, highlighting the company's tactical efficiency in utilizing shareholders' funds. Growth Drivers in Place: John Bean Technologies’ 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 in turn enhance their yield and productivity.
The company is capitalizing on extensive installed base to expand recurring revenues (which accounts for around 40% of total revenues) from aftermarket parts and services, equipment leases, consumables and airport services. This part of the business has been witnessing a CAGR of 9% over the past three years. In fact, it has further room for growth and will contribute to margins.
John Bean Technologies has a strategic acquisition program focused on companies that add complementary products. Further, its ongoing restructuring plan will help improve effectiveness and productivity across all business units.
Strong demand for packaged food, meat and staples in retail on account of the pandemic bodes well. John Bean Technologies is focusing on its cost structure in light of the uncertain market conditions amid the coronavirus pandemic. This includes a hiring freeze, halting pay raises, curtailing incentives, temporary leaves and layoffs where necessary. It is also cutting down discretionary spending.
The company is poised to perform well in the long run, courtesy of growing middle class, increasing protein and value-added food and beverage consumption globally.
However, there are a few factors that are impeding growth in the near term.
The company has witnessed steep declines in demand from restaurants in the FoodTech end segment owing to the coronavirus pandemic. At FoodTech segment, the general economic and trade uncertainties have impacted the decision-making process among customers. The potential impact of coronavirus outbreak on supply chain and general business disruptions is likely to act as a headwind. Some AeroTech end markets have been severely impacted by decline in global passenger air travel.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector are Lakeland Industries, Inc. (
LAKE Quick Quote LAKE - Free Report) , SiteOne Landscape Supply, Inc. ( SITE Quick Quote SITE - Free Report) and Axon Enterprise, Inc. . While Lakeland Industries and SiteOne Landscape Supply sport a Zacks Rank #1, Axon carries a Zacks Rank of 2, at present. You can see . the complete list of today’s Zacks #1 Rank stocks here
Lakeland Industries has a projected earnings growth rate of 418% for 2020. The company’s shares have surged 50% in the past three months.
SiteOne Landscape Supply has an expected earnings growth rate of 15% for the current year. The stock has appreciated 54% over the past three months.
Axon has an estimated earnings growth rate of 14.4% for the ongoing year. The company’s shares have rallied 29% in the past three months.
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