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The Manitowoc Company, Inc. (MTW) Up 9.6% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for The Manitowoc Company, Inc. (MTW). Shares have added about 9.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is The Manitowoc Company, Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Manitowoc Reports Loss in Q1, Revenues & Orders Up Y/Y

Manitowoc reported an adjusted loss per share of 6 cents in the first quarter of 2021, which was narrower than the year-ago quarter’s loss of 18 cents per share. However, the company missed the Zacks Consensus Estimate of earnings per share of 1 cent.

Including one-time items, the company reported loss per share of 9 cents in the quarter compared with a loss of 22 cents in the prior-year quarter.

Manitowoc’s revenues improved 7.6% to $354 million from the prior-year quarter figure of $463 million. The top line beat the Zacks Consensus Estimate of $345 million.
 
Orders in the reported quarter increased 26% year over year to around $474 million. Backlog as of the end of the reported quarter was $662.5 million, up 27% from the year-ago quarter’s end.

Operational Update

Cost of sales increased 7.5% year over year to $286 million in the reported quarter. Gross profit improved 8% year over year to $68.4 million. Gross margin was 19.3% in the reported quarter compared with 19.2% in the prior-year quarter.
 
Adjusted engineering, selling and administrative expenses rose 2.5% year over year to $57.3 million. Adjusted operating income was $11 million in the quarter, up from $7.2 million in the prior-year quarter. Adjusted operating margin in the reported quarter was 3.1% compared with 2.2% in the year-ago quarter. Adjusted EBITDA in the reported quarter was $21.1 million, up from $16.1 million in first-quarter 2020. Adjusted EBITDA margin expanded 100 basis points year over year to 6% in the quarter under review.

Financial Updates

Manitowoc reported cash and cash equivalents of $158.5 million as of Mar 31, 2021, up from $18.7 million as of Dec 31, 2020. Long-term debt was $300 million as of Mar 31, 2021, flat compared with Dec 31, 2020. The company generated $41 million of cash in operating activities in first-quarter 2021 compared with cash utilization of $79 million in the prior-year quarter.

The company has been witnessing positive trends in crane demand across all segments. However, lingering impact of COVID-19, input cost inflation and supply chain challenges are likely to persist for the balance of the year, more weighted towards the second-half results. Manitowoc is taking actions to mitigate these headwinds. Meanwhile, the company continues to look for acquisition opportunities and accelerate product development in its all-terrain product line. It also plans to scale-up its Chinese tower crane business and grow tower crane rental fleet in Europe.

Manitowoc initiated adjusted EBITDA guidance of $90 million to $105 million for 2021. The mid-point of the range indicates growth of 17% from the adjusted EBITDA of $83.1 million in 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 25% due to these changes.

VGM Scores

Currently, The Manitowoc Company, Inc. has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, The Manitowoc Company, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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