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