Actuant Corporation (ATU): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Actuant reported earnings of $0.38 per share in first-quarter fiscal 2015, lower than the Zacks Consensus Estimate of $0.43 and down 13.6% year over year. Net revenue declined 3.5% due to currency headwinds and decline in core sales. Improvement in Energy segments' sales were, however, offset by weak performance of the Industrial and Integrated Solutions' division. Higher working capital, required to finance growth plans, considerably enhanced the debt burden of Actuant. Furthermore, threats of industry rivalry contain risks of market share loss for the company. Although Actuant harbors positive initiatives like new capital deployment schemes, contingency plans and cost-reduction strategies, keeping in mind the present headwinds, we prefer to maintain an Underperform recommendation on the stock.


Overview:

Actuant Corporation (ATU) is involved in the designing, manufacture and distribution of various industrial products and systems for its clients in more than 30 countries. Founded in 1910, the company is headquartered in Menomonee Falls, WI. The company operated through four segments, prior to the divestment of the Electrical segment in Dec 2013. The current segments are discussed below:

Industrial: The segment designs, produces and markets various hydraulic and mechanical tools to general maintenance and repair, industrial, infrastructure and production automation markets through brands like Enerpac, Simplex, Precision Sure-Lock and Milwaukee Cylinder. The tools help in enhancing productivity while lowering labor costs.

Energy: The segment deals with technical products and services, primarily joint integrity tools and connectors, along with cable and rope solutions, useful to the energy markets. These products reduce customer downtime and increase safety and reliability in areas such as wind turbines, refineries, fossil fuel etc. Popular brands include names like Hydratight, Morgrip, Cortland and Jeyco, among others.

Engineered Solutions: The segment is a global leader in the designing and assembling of industrial products and motion-control systems. The segment mainly targets transportation markets with products like hydraulic cab-tilt and latching systems through brands like Power-Packer, Gits and Power Gear Brands. Other products of the segment such as gearboxes, torque limiters, drive shafts target markets like construction, forestry, aerospace and security.

Segmental revenues for first-quarter fiscal 2015 are displayed in the chart below.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




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