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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