We reaffirmed our long-term Neutral recommendation on
) on Apr 2, 2013, as risk reward remains fairly balanced for the
stock at this juncture.
Why the reiteration?
Actuant's earnings per share of 38 cents in fiscal second
quarter of 2013, reported on Mar 20, beat the Zacks Consensus
Estimate of 37 cents by a penny. However, the results declined by
11.6% year over year, primarily due to seasonality.
Total revenue of $370.4 million in the quarter beat the Zacks
Consensus Estimate of $365.0 million by 1.5%. Core sales
decreased 6.0% while acquisitions contributed 4.0%. Revenue
declined 2.0% compared with the year-ago revenue of 378.0
Estimates have moved equally in either direction for fiscal
2013 and 2014, over the past 30 days. The movements have resulted
in unchanged consensus estimates at $2.18 and $2.42 per share for
fiscal 2013 and 2014, respectively.
Actuant predicts irregular end-market demand along with an
unfavorable market economy for fiscal 2013. Due to this
uncertainty, Actuant has pulled down its earlier forecast decline
in revenue of 1%-3% to a decline of 3%-5%. It expects EPS to
range between $2.15 and $2.25, although the company is skeptical
about attaining the earnings within the expected range.
Actuant has a good history of successful acquisitions, which
has been of great help for revenue generation. Also, the company
is successfully managing its margins, even in adverse scenarios.
It is expected that the Engineered Solutions segment will
experience margin improvement in the coming quarters as a result
of cost reduction efforts as well as higher production
Engineered Solutions segment's revenue is likely to reduce in
the future, leading to a decline in Actuant's total revenue, due
to the divestiture of Nielsen Sessions business unit.
Other Stocks to Consider
Actuant currently carries a Zacks Rank #3 (Hold). Other
diversified machinery companies worth a look are
Stanley Black & Decker Inc.
Active Power Inc.
); each of which carries a Zacks Rank #2 (Buy).
ACTIVE POWER (ACPW): Free Stock Analysis
ACTUANT CORP (ATU): Free Stock Analysis
KENNAMETAL INC (KMT): Free Stock Analysis
STANLEY B&D INC (SWK): Free Stock Analysis
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