On Jul 3, 2014, we issued an updated research report on
). The company has been growing inorganically over the past few
quarters. It completed the acquisition of Hayes in May 2014 and
Viking SeaTech in Aug 2013.
These acquisitions have been contributing significantly to
revenue growth, accounting for 5% of total revenues in fiscal
third-quarter 2014. Both these acquisitions will continue to be
accretive in the quarters ahead.
Moreover, the company is in the process of streamlining its
asset portfolio in order to focus on its productive holdings.
Additionally, Actuant's organic growth is gaining pace. Revenue
improvement in both the Energy and Engineered Solutions segments is
expected to continue.
The company's initiatives to enhance shareholders' value are
also noteworthy. Currently, Actuant has a share repurchase plan
worth $7 million in place. With further share repurchases in the
quarters ahead, we expect earnings per share to increase.
However, Actuant's international presence exposes it to foreign
currency risks, varied environmental and economical laws as well as
diverse cultures. This may result in severe operational disruptions
for the company.
Actuant, at the same time, operates in a highly competitive
industry. In order to stay ahead of its peers, the company needs to
keep inventing products and technologies. This involves huge
research and development expenditure, which may prove futile if
customers remain unconvinced.
With a market capitalization of $2.4 billion, Actuant holds a
Zacks Rank #3 (Hold). Some better-ranked stocks in the industry
Blount International Inc.
EnPro Industries, Inc.
). While Blount International and EnPro Industries sport a Zacks
Rank #1 (Strong Buy), Kennametal holds a Zacks Rank #2 (Buy).
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