Here's Why You Should Buy Columbus McKinnon (CMCO) Stock

By Zacks Investment ResearchStock MarketsNov 19, 2017 09:24PM ET

www.investing.com/analysis/heres-why-you-should-buy-columbus-mckinnon-cmco-stock-200266726

Here's Why You Should Buy Columbus McKinnon (CMCO) Stock

By Zacks Investment Research | Nov 19, 2017 09:24PM ET

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We believe that Columbus McKinnon Corporation (NASDAQ:CMCO) is a solid choice for investors seeking exposure in the machinery space. The company is poised to gain traction from its initiatives to strengthen businesses through product diversification and international expansion as well as acquired assets.

The stock has been upgraded to a Zacks Rank #1 (Strong Buy) on Nov 18.

Columbus McKinnon performed well in three of the last four quarters, pulling off an average earnings surprise of 15.35%. Notably, the company’s shares have rallied 26.4% in the last three months, outperforming 19.1% gain of the industry.

Why the Upgrade?

Columbus McKinnon performed well in second-quarter fiscal 2018 (ended Sep 30, 2017), with net income growing roughly 45.5% year over year. Revenues improved 40.1% on the back of 30.2% gain from STAHL CraneSystems buyout (completed in January 2017), 8% volume gains, 0.5% positive impact from pricing and 1.4% favorable foreign currency impact. Backlog at quarter end jumped 5.3% since the beginning of fiscal year.

We believe that Columbus McKinnon is well placed to gain traction from its diversified product portfolio, having secured leading market share in the United States. Prime products include hoists, chain & rigging, jib cranes, actuators and digital power control. Also, strengthening end-markets demand, especially in the entertainment, construction and government, as well as rebound in mining activities will prove beneficial.

Additionally, Columbus McKinnon’s acquisitive nature has helped in business expansion over time. The STAHL CraneSystems buyout has strengthened the company’s foothold in Europe, Middle East & Africa and APAC regions. The company anticipates realizing $5 million and $11 million in synergies in fiscal 2018 and fiscal 2019, respectively from this acquisition. Research and development remain a prime area of focus for the company. It is working on ways to reduce spending on general & administrative purposes while using the same for more development of new and improved products.

For fiscal 2018, Columbus McKinnon anticipates capital expenditures to total $15-$20 million. Also, it intends to repay approximately $55 million of debt, up from repayments of $45-$50 million anticipated earlier. In the third fiscal quarter, organic growth is projected to be in the 3-5% range.

The stock’s earnings estimates for fiscal 2018 and fiscal 2019 have been revised upward by one and two brokerage firms, respectively, in the last 30 days. Currently, the Zacks Consensus Estimate stands at $1.95 for fiscal 2018 and $2.47 for fiscal 2019, reflecting growth of 1% and 5.6% from their respective estimates 30 days ago.

Columbus McKinnon Corporation Price and Consensus

Columbus McKinnon Corporation Price and Consensus | Columbus McKinnon Corporation Quote

Other Stocks to Consider

Columbus McKinnon has a market capitalization of $888 million. Other stocks worth considering in the machinery industry include Kadant Inc. (NYSE:KAI) , Sun Hydraulics Corporation (NASDAQ:SNHY) and Altra Industrial Motion Corporation (NASDAQ:AIMC) . While Kadant and Sun Hydraulics sport a Zacks Rank #1, Altra Industrial Motion carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kadant pulled off an average positive earnings surprise of 20.32% over the last four quarters. Also, earnings estimates for 2017 and 2018 were revised upward over the last 60 days.

Sun Hydraulics delivered an average positive earnings surprise of 9.58% in the trailing four quarters. Also, bottom-line expectations for 2017 and 2018 improved over the past 60 days.

Altra Industrial Motion’s financial performance was impressive, with an average positive earnings surprise of 17.30% in the last four quarters. Also, earnings estimates for 2017 and 2018 were revised upward over the last 60 days.

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Kadant Inc (KAI): Free Stock Analysis Report

Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report

Columbus McKinnon Corporation (CMCO): Free Stock Analysis Report

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Here's Why You Should Buy Columbus McKinnon (CMCO) Stock

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