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

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Summary:
Actuant reported strong results for the third quarter of fiscal 2014. Earnings increased 13% year over year to $0.70 per share, while revenues grew 10% to $378 million. The Energy and Engineering Solutions segments are progressing organically whereas Actuant's acquisition of Viking SeaTech and Hayes are expected to be accretive to the company's earnings in the coming quarters. Further, Actuant's efforts to reduce outstanding shares are expected to boost earnings per share in the quarters ahead. However, the Industrial segment has not been performing well and is expected to record a sales decline in fiscal fourth quarter. Actuant's presence in various countries exposes it to many geo-political risks. Moreover, the strategic acquisitions of the company also pose certain integration risks. Based on these factors, we prefer to have a balanced view and maintain a Neutral 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 the transportation markets with products like hydraulic cab-tilt and latching systems through the 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 fiscal 2013 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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