Stock Worth Buying: Columbus McKinnon - Analyst Blog

Zacks Investment Research upgraded Columbus McKinnon Corporation CMCO to a Zacks Rank #1 (Strong Buy) on Jun 20, 2014. Going by the Zacks model, companies holding a Zacks Rank #1 have strong chances of performing better than the broader market.

Why the Upgrade?

Columbus McKinnon's fiscal fourth-quarter 2014 (ended Mar 31, 2014) results lifted sentiments for the company, as the share price has gained nearly 3.4% since May 22. Year-to-date, the company has yielded a return of 5.2%. A brief discussion on the company's results is provided below:

Adjusted earnings came in at 52 cents per share, up 56.7% year over year but in-line with the Zacks Consensus Estimate. Revenues increased 11.0% year over year on the back of an 8% rise in volume, 2% gain from acquisitions, 1% positive price impact and a 0.1% favorable impact from foreign currency translation. Gross profits increased 13.8% while margin grew by 70 basis points.  

For fiscal 2015, Columbus McKinnon anticipates improvement in order levels and modest growth compared with fiscal 2014. Adequate steps to boost sales organically will be taken while the company will also remain active on acquisition front. Capital spending will lie in the $20−$25 million range.

The quarter results triggered positive revision in earnings estimate for Columbus McKinnon. Over the past 30 days, the Zacks Consensus Estimate has climbed 2.5% to $2.05 for fiscal 2015, representing year-over-year growth of 33.1%. This, along with an average positive earnings surprise of 5.4%, has made us optimistic about the company's performance in the quarters ahead.

Other Stocks to Consider

Columbus McKinnon has a $564 million market capitalization. Other companies worth considering in the machinery industry include Komatsu Ltd. (KMTUY), Caterpillar Inc. CAT and Illinois Tool Works Inc. ITW. While Komatsu sports a Zacks Rank #1 (Strong Buy), both Caterpillar and Illinois Tool Works hold a Zacks Rank #2 (Buy).