will manitowoc company inc. stock recover in 2016?
Post on 21-Apr-2017
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Will Manitowoc Company Inc. Stock Recover in 2016?
Image sources: Manitowoc
2015: A terrible year for Manitowoc
Manitowoc’s dismal operational performance is
largely to blame
Why the stock crashed
Plunging profits
The worst in the industry
So why did Manitowoc’s sales and profits tumble in
2015?
The company faced many headwindsPlunging oil prices hurt demand for off-highway cranes from the
oil & gas sectorPersistent weakness in key international markets like Asia and
the Middle East hurt crane sales Lower capital spending by restaurant chains hurt demand for
foodservice equipmentStart-up problems with KitchenCare range hurt foodservice
marginsCurrency fluctuations: a stronger dollar = lower international
revenues when converted. Hurt both cranes and foodservice segments
While Manitowoc’s foodservice business appears to be turning around, the outlook for cranes looks grim going forward
What lies ahead
Challenges aplenty
Declining manufacturing activity in China and devaluation of the yuan = lower demand for cranes
Oil could fall further as supply > demand and OPEC is standing its ground
Growth in key international markets like Brazil and China remains uncertain
Dollar remains strong
Troubling signsManitowoc’s crane orders and backlog
slipped 40% and 12% year over year, respectively, in Q3. Operating margin fell to 1% from 7.3%.
Outlook for 2015: 15%-20% drop in crane sales and flat foodservice revenue. Management expects 2016 to “be a challenging year.”
Aggressive restructuring underway, indicating greater pain ahead.
Foolish takeaway: A risky betToo many headwinds, no major growth catalyst in sightStock is expensive at 36 times trailing P/ECompany on track to split into two in the ongoing quarter. But deteriorating end markets could mean little shareholder value in a standalone cranes company
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