Manitowoc Shows Stability on Fundamentals - Analyst Blog

On Mar 7, 2014, we issued an updated research report on The Manitowoc Company, Inc. MTW. This commercial foodservice equipment manufacturer reported fourth-quarter 2013 adjusted earnings per share of 47 cents on Jan 30, which marked an impressive year-over-year increase of 74%.

The results benefited from a strong performance in the Foodservice segment, new product offering and implementation of cost control initiatives. The bottom line beat the Zacks Consensus Estimate of 33 cents.

For 2014, Manitowoc expects modest top-line growth for the Crane segment. Foodservice revenues are expected to rise in mid single digits. The company forecasts high single-digit improvement in operating margins in the Crane segment and high-teens gain in the Foodservice segment.

Moreover, demand in the wind sector and oil and gas market are expected to grow. Notably, Manitowoc is optimistic about its new technologically advanced products that were introduced at ConExpo. The launch of these products could be a catalyst for the Crane segment, going forward.

The company's strategy of increasing focus on customers, solutions-based synergies and leveraging economies of scale will drive growth in the long term. The incorporation of advanced technology, innovation in brands and manufacturing initiatives will also aid growth.

In Jan 2014, Manitowoc declared that it would refinance some of its debt. The company extended maturity dates of revolving credit facility and term loans from 2016 and 2017 to 2018 and 2020, respectively. It plans to utilize the proceeds from these new credit facilities to redeem its 9.5% senior notes due 2018 that reached the call date in Feb 2014. Such moves are expected to save approximately $20 million of interest expense in 2014.

Manitowoc will thus benefit from execution of the new credit agreement, cost reduction and process improvement initiatives, debt repayment and its broader product offering.

Currently, Manitowoc has a Zacks Rank #2 (Buy).

Key Picks from the Sector

Some better-ranked stocks worth considering in the sector include H&E Equipment Services Inc. HEES, Komatsu Ltd. (KMTUY) and Pentair Ltd. PNR. While H&E Equipment Services has a Zacks Rank #1 (Strong Buy), Komatsu and Pentair carry a Zacks Rank #2 (Buy).