Analyst Sees Actuant Earnings Bottoming In 2017

BMO Capital remains on the sidelines of

Actuant Corporation ATU

, as weakness in key end-markets and mix pressures lead to another weak, albeit in-line, quarter with disappointing guidance.

"We do see earnings bottoming in 2H17, but our reduced estimates, which are at the lower end of guidance, imply the stock is fully valued," analyst Scott Graham wrote in a note.

Actuant's fourth-quarter adjusted EPS fell 18 percent to $0.30, in line with the Street and guidance. Graham noted that this was the 10th quarter in the last 11 in which EPS declined. Sales dropped 8 percent and came in below expectations.

The company guided F2017 EPS at $1.00–$1.20, which was below expectations. Actuant's first-quarter EPS guidance of $0.14–$0.19 was, at the midpoint, >40 percent below the Street's view.

"We are lowering our F17E by 16 percent to $1.07 and our F18 by 13 percent to $1.23. Our F17 EPS estimate is at the lower end of guidance," Graham continued.

The analyst maintains his Market Perform rating and cut the target price by $2 to $22 given earnings have declined for three straight years with a fourth seemingly on the way in F17. Also, the analyst is not expecting a resumption of "decent earnings growth" until F18.

At time of writing, Actuant was up 4.25 percent at $23.28.

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