On May 15, we reiterated our Neutral recommendation on
Joy Global Inc.
), the manufacturer of mining equipment used in various types of
mining. The company currently has a Zacks Rank #4 (Sell).
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Why the Reiteration?
Joy Global started fiscal 2013 on a positive note, with adjusted
earnings of $1.31 per share in the first quarter of fiscal 2013
beating the year-ago number by 4% and the Zacks Consensus
Estimate by 14.9%. Revenues increased 1.2% from the year-ago
period to $1.13 billion, and was also ahead of the Zacks
Consensus Estimate of $1.08 billion.
However, Joy Global continues to face the rippling effect of the
sluggish 2012 market conditions, with its booking in the reported
quarter declining from the comparable prior-year period.
On the positive side, global steel and coal production is on an
uptrend with a similar trend observed in the copper markets.
These macro factors can influence growth at Joy Global.
Particularly rising demand for coal in China and India is
expected to improve the fortunes of this mining equipment
However, the slowly declining coal stockpiles, continued Eurozone
debt crisis and the decline in booking make us skeptical of any
quick recovery from 2012 levels. In addition, dependence on a
limited group of customers for bulk sales could affect the
profitability of the company if it loses any of its prime
Intense competition in the mining industry, consistent
expenditure in research & development to match its peers in
the technology game and inherent risk of failing to meet customer
demand could undermine the positive catalysts of the company.
Other Company Release
In the latest quarterly release,
Manitowoc Company, Inc.
) missed the Zacks Consensus Estimate by 2.24% and 35.71%,
H&E Equipment Services Inc.
) earnings were 7.7% ahead of our expectation.