Macquarie (MIC) Displays Bright Prospects, Risks Persist
On Oct 13, we issued an updated research report on Macquarie Infrastructure Company MIC.
In the past three months, this Zacks Rank #3 (Hold) stock has lost 15.6% against the industry’s growth of 11.2%.
Macquarie has been benefiting from solid demand for storage of petroleum products over the past several months. Notably, the company’s average storage utilization at the International-Matex Tank Terminals (IMTT) segment was 94.6% in the second quarter. For 2020, it expects average storage utilization at the IMTT segment to be in the low-to-mid-90s percentage range. The company’s focus on the diversification of product along with its effort toward developing additional capacity and related infrastructure work is likely to support revenues in the quarters ahead.
Also, Macquarie currently has a significant number of growth projects in its pipeline, which is expected to strengthen the performance of its segments. Notably, the company expects to deploy $200-$225 million of growth capital this year, with about $180 million of that allocated to projects related with IMTT.
In addition, Macquarie remains committed to increasing wealth of shareholders through dividend payments. For instance, in the first six months of 2020, it paid out dividends worth $87 million. The dividend payments have been halted temporarily on account of the end-market uncertainties, owing to the coronavirus pandemic.
Low general aviation flight activity on account of the travel limitations implemented amid the pandemic will likely continue to affect the demand for products and services provided by the company’s Atlantic Aviation and MIC Hawaii segments. This is expected to have an adverse impact on its top-line performance in the upcoming quarter.
Further, Macquarie’s high-debt profile poses a concern. For instance, in six years (2014-2019), its long-term debt rose 4.7% (CAGR). The metric was $3,254 million at the end of the second quarter of 2020, reflecting a marginal increase sequentially. Also, its cash and cash equivalents of $874 million (exiting the second quarter) do not seem impressive, considering its high debt profile. Further increase in debt levels can raise the company’s financial obligations.
Stocks to Consider
Some better-ranked stocks from the same space are Crane Company CR, Danaher Corporation DHR and ITT Inc. ITT. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Crane delivered a positive earnings surprise of 5.16%, on average, in the trailing four quarters.
Danaher delivered a positive earnings surprise of 10.83%, on average, in the trailing four quarters.
ITT delivered a positive earnings surprise of 20.46%, on average, in the trailing four quarters.
Have You Seen Zacks’ 2020 Election Stock Report?
The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ITT Inc. (ITT): Free Stock Analysis Report
Danaher Corporation (DHR): Free Stock Analysis Report
Macquarie Infrastructure Company (MIC): Free Stock Analysis Report
Crane Company (CR): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.