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Reasons to Add Manitowoc (MTW) Stock to Your Portfolio Now

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The Manitowoc Company Inc. (MTW - Free Report) is well-poised for growth on the back of improving demand, robust backlog levels, and its ongoing cost-control and productivity improvement measures. Acquisitions and efforts to grow its aftermarket business, and product innovation are other catalysts.

The company currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank of 1  or 2 (Buy), offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let's delve deeper into the factors that make Manitowoc a compelling investment option at the moment.

Solid Q4 Performance

Manitowoc reported adjusted earnings per share (EPS) of 74 cents in fourth-quarter 2022 which marked a 185% year-over-year surge. The bottom line beat the Zacks Consensus Estimate of 23 cents by a wide margin of 222%. The company has a trailing four-quarter earnings surprise of 38.8%, on average.

Robust Backlog Levels Support 2023 View

In the fourth quarter of 2022, MTW witnessed 15% year-over-year growth in orders to $708 million. The backlog at the end of 2022 was $1,056 million, up 4.5% from the 2021-end levels.

Backed by this momentum, Manitowoc expects revenues of $2-$2.1 billion for 2023. The company reported revenues of $2.03 billion in 2022. Adjusted EPS is expected between 35 cents and $1.15. MTW reported an adjusted EPS of $1.06 in 2022.

Impressive Price Performance

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Shares of the company have soared 85.9% in the past six months compared with the industry’s 25.2% growth.

Upbeat Growth Projections

The Zacks Consensus Estimate for Manitowoc’s fiscal 2023 earnings per share has moved up 62% over the past 30 days and is pegged at 84 cents. The same for fiscal 2023 has moved north by 30% over the past 30 days to $1.14.

Strategies to Grow Business in Place

In North America, demand from residential and non-residential construction is driving demand for Manitowoc’s equipment. Due to the U.S. Infrastructure Investment and Jobs Act, the rising investment in roads, bridges, airports and waterways represent a massive opportunity. The company expects demand in the Middle East to be robust in the upcoming quarters. Qatar and Kuwait are also showing promising signs of growth. Also, the pressing need to replace the aging crane fleet will support demand for Manitowoc’s equipment.

Manitowoc’s aftermarket business continues to perform well. In the third quarter of 2022, aftermarket sales were up 27%. Growth is primarily stemming from higher-margin parts and services. The company remains focused on improving this crucial part of the business.

Moreover, the company’s focus on innovation will continue to aid it in leading the industry by providing differentiated products that add value to customers. Manitowoc has been taking actions to align production with the changing demand levels.

The company remains focused on cash preservation and balance sheet management, while funding critical programs for growth. Manitowoc’s total debt-to-total capital ratio was at 0.42 as of Dec 31, 2022, much lower than the industry’s 0.70.

It continues to evaluate acquisition opportunities to accelerate product development programs in its all-terrain product line. Manitowoc is scaling up its China tower crane business and has launched two crane models in 2022. Notably, the tower crane market in China is the largest tower crane market in the world. The company invested $15 million in its tower crane rental fleet in Europe, which helped gain market share in Germany and win some strategic orders with key accounts.

MTW has an estimated long-term earnings growth rate of 10%.

Other Stocks to Consider

Some other top-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Tenaris (TS - Free Report) and Illinois Tool Works (ITW - Free Report) . OI and TS sport a Zacks Rank of 1 at present, and ITW has a Zacks Rank of 2.

OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 59% in the last six months.

Tenaris has an average trailing four-quarter earnings surprise of 11.5%. The Zacks Consensus Estimate for TS’ 2023 earnings is pegged at $6.04 per share. This indicates a 39.5% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 17% in the past 60 days. Its shares gained 5% in the last six months.

The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 4% upward in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares have gained 18% in the past six months.

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