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Manitowoc To Grow On Strategic Initiatives Despite Headwinds
By Zacks Investment ResearchStock MarketsJan 23, 2018 10:55PM ET
www.investing.com/analysis/manitowoc-to-grow-on-strategic-initiatives-despite-headwinds-200283213
Manitowoc To Grow On Strategic Initiatives Despite Headwinds
By Zacks Investment Research | Jan 23, 2018 10:55PM ET On Jan 24, we issued an updated research report on The Manitowoc Company Inc. (NYSE:MTW) . The company is making significant progress in the implementation of The Manitowoc Way to drive four key strategic priorities that will help sustain long-term margin expansion. It will gain from the rising demand in the Americas’ energy and commercial construction markets. However, excess inventory due to cancellation of an order in India, higher input costs (particularly steel) will thwart near-term results. 
Caterpillar, Inc. (CAT): Free Stock Analysis Report
Manitowoc Company, Inc. (The) (MTW): Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
Original post
Zacks Investment Research
After incurring losses for three straight quarters, which bore the brunt of weak crane demand, the company returned to profitability in the second quarter of 2017. The momentum continued in the third quarter as well. This better-than-expected performance can be attributable to the company’s efforts toward consolidating the manufacturing footprint and reducing cost of organizational structure. Additionally, the results were backed by improved U.S. energy and commercial construction markets that helped offset persisting weakness in U.S. large infrastructure, Asia Pacific and the Middle East.
Third-quarter orders increased 21% year over year to $376 million and the company ended the quarter with a robust backlog of $467.9 million, up 32% year over year. This bodes well for an improved fourth-quarter performance. The Zacks Consensus Estimate for the fourth quarter is currently pegged at a loss of 6 cents per share, a substantial improvement from the loss of 92 cents in the prior-year quarter.
Near-Term Headwinds Remain
Manitowoc declared a cancelation of an order in India worth about $18 million. After the customer took partial delivery of the order, the Indian government implemented a regulation change forbidding the import of the left-handed driven vehicles in the particular crane segment. Manitowoc will try to market this excess inventory in the fourth quarter. Further, the fourth quarter is historically a lower sequential margin quarter due to fewer working days.
Moreover, continuing weakness in mobile cranes and commercial construction projects are significantly hurting Manitowoc. Some key international APAC markets remain weak (except Australia). The Middle East remains challenging because of geopolitical uncertainties. Increased material costs, particularly steel as well as constraints in the supply chain are likely affect Manitowoc’s results in the near term.
The company is facing stiff competition from China-based crane manufacturers. These crane manufacturers have undergone product-line expansion, primarily adding larger cranes, and captured growing shares of the export markets in Asia, Africa, the Middle East and South America.
Poised Well on The Manitowoc Way
Despite near-term headwinds, the company is poised well for the long term as evident from its significant progress in the implementation of The Manitowoc Way to boost the four key strategic priorities — margin expansion, growth, innovation and velocity — that are likely to aid in delivering double-digit margin growth in the long term.
Margin Expansion Remains the First Priority: To deliver improvement in margins, the company remains focused on controlling cost, reducing headcount, increasing productivity and eliminating waste. Moreover, it continues to align manufacturing capacity to match the current levels of demand.
Improving Competitive Position to Gain Market Share: The company is focusing on not only designing quality and reliability of it products but also in the process of manufacturing cranes. To drive growth, Manitowoc has also taken efforts to strengthen distribution network. Meanwhile, to ensure growth, the company implemented key account management on a global basis this year, which has already started reaping benefits. Evidently, Manitowoc received an order from a large crane operator in Poland that will be shipped in the fourth quarter. Previously, the company had received an order from this same operator in 2008.
Innovation Holds the Key: Manitowoc continues to focus on new product development to remain competitive. It also has hiked production and delivery of its newly developed TMS 9000-2 truck-mounted cranes. The product has received strong customer response and is gaining market share. While the latest product in the company’s pipeline continues to be strong, it remains on track to introduce four new mobile products in June 2018.
Increasing velocity in all business processes: The company is striving to reduce the number of days it takes to complete an activity from design through manufacturing significantly.
Consequently, Manitowoc’s long-term outlook remains strong. In addition, it continues to be committed toward reaching its target of double-digit operating margins with 150-200 basis points of improvement year over year. In fact, the company anticipates achieving long-term target of double-digit operating margins by 2020 through continued streamlining organizational structure.
Over the past six months, Manitowoc has outperformed the industry with respect to price performance on the back of improved results. While the stock gained around 72.4%, the industry recorded growth of 48.9%.
Manitowoc currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the sector are Deere & Company (NYSE:DE) , H&E Equipment Services, Inc. (NASDAQ:HEES) and Caterpillar Inc. (NYSE:CAT) . While Deere and H&E Equipment sport a Zacks Rank #1 (Strong Buy), Caterpillar carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere has a long-term earnings growth rate of 8.2%. Its shares have rallied 32% in the past year.
H&E Equipment Services has a long-term earnings growth rate of 18.6%. The company’s shares have appreciated 82.8% in a year.
Caterpillar has a long-term earnings growth rate of 10.3%. The stock has gained 48% in a year’s time.
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Caterpillar, Inc. (CAT): Free Stock Analysis Report
Manitowoc Company, Inc. (The) (MTW): Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
Original post
Zacks Investment Research
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Manitowoc To Grow On Strategic Initiatives Despite Headwinds
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