Altra Industrial (AIMC) Declines 40% YTD: What's Hurting It?

Shares of Altra Industrial Motion Corp. (NASDAQ:AIMC) have plunged sharply since the beginning of 2020. We believe that the price decline not only reflects investors’ reaction to the company’s fourth-quarter results and dismal projections but also points toward the nervousness caused by the coronavirus outbreak.

The Braintree, MA-based company belongs to the Zacks Manufacturing – General Industrial industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. The industry is currently at the bottom 28% (with the rank of 182) of more than 250 Zacks industries.

Year to date, the company’s shares have dipped 40.1% compared with the industry’s decline of 18.2% and the sector’s fall of 20.6%. Notably, the S&P 500 has declined 7.8% during the same period.

The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Factors Affecting the Stock

So far in 2020, Altra Industrial has reported results for fourth-quarter 2019. Results were weaker than expected, with earnings lagging the Zacks Consensus Estimate by 1.5%. Sales marginally surpassed estimates by 0.1%, while were down 5.8% year over year. Weakness in multiple end-markets adversely impacted organic sales. Forex woes too played spoilsport in the quarter.

In addition to the dismal performance, weak projections provided by Altra Industrial must have added to the bearish sentiments for the stock. Difficult end-markets conditions are predicted to adversely impact the company’s performances in 2020 (especially in the first half). Revenues will likely be $1.72-$1.77 billion in 2020, suggesting a decline from $1.83 billion reported in 2019. Forex woes will continue to be headwinds.

Also, the coronavirus (officially named as COVID-19) outbreak is impacting economies across the globe. The outbreak has affected the stock market, and its impact can be seen across multiple industries. Altra Industrial predicts coronavirus-related woes to amount to $10-$50 million in 2020. Notably, the company has several distribution and manufacturing facilities in China.

Non-GAAP earnings are predicted to be $2.40-$2.60 per share in 2020. Notably, the company reported non-GAAP earnings of $2.86 per share in 2019.

Currently, the Zacks Consensus Estimate for Altra Industrial’s earnings is pegged at $2.56 for 2020 and $3.05 for 2021, marking declines of 4.5% and 5% from the respective 60-day-ago figures. Notably, there were two downward revisions in estimates for 2020 and one for 2021. No upward revision in estimates has been recorded for both years in the past 60 days.

Altra Industrial Motion Corp. Price and Consensus

Altra Industrial Motion Corp. Price and Consensus

Altra Industrial Motion Corp. price-consensus-chart | Altra Industrial Motion Corp. Quote

Such downward revisions in earnings estimates are reflective of bearish sentiments for the company.

Altra’s Performance Versus Three Peer Companies

The company underperformed three peer companies that belong to the same industry. Three such stocks are Graco Inc. (NYSE:GGG) , Nordson Corporation (NASDAQ:NDSN) and IDEX Corporation (NYSE:IEX) , with respective year-to-date declines of 7%, 19% and 21.1%.

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