Actuant's Inorganic Growth on Track - Analyst Blog

By Zacks Equity Research,

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On Jul 3, 2014, we issued an updated research report on machinery company Actuant Corporation ( ATU ). 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 include Blount International Inc. ( BLT ), EnPro Industries, Inc. ( NPO ) and Kennametal Inc. ( KMT ). While Blount International and EnPro Industries sport a Zacks Rank #1 (Strong Buy), Kennametal holds a Zacks Rank #2 (Buy).

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ACTUANT CORP (ATU): Free Stock Analysis Report

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: ATU , KMT , NPO , BLT

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