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Should Actuant (ATU) Stock Be Part of Your Portfolio Now?


On Nov 29, 2016, Zacks Investment Research upgraded Actuant Corporation ATU to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell). Going by the Zacks model, companies holding a Zacks Rank #3 have chances of performing in line with the broader market.

Why Hold?

Actuant aims to enhance its profitability by undertaking tight cost-management initiatives. The company’s unique business model primarily emphasizes on lucrative innovation and growth projects. Also, the company’s ongoing restructuring actions and accelerating lean production efforts are estimated to be conducive to growth in the near term.

Moreover, Actuant is trying to reinforce its business via strategic acquisitions. For instance, the FourQuest Energy buyout, completed in Mar 2016, has been driving the company’s energy business revenues. Notably, the company undertakes strategic capital deployment programs, supported by its healthy free cash flow generation.

However, the benefits generated by the above mentioned positive aspects might be partially offset by certain headwinds. For instance, weak prices of energy resources, like oil, are currently affecting the revenues generated by Actuant. The company projects to experience a core sales fall of roughly 14–16% in first-quarter fiscal 2017.

In addition, each business segment of Actuant faces tough competition. Extensive business rivalry increases the bargaining power of customers and thus, exposes it to risks of market share loss. Moreover, the appreciating U.S. currency is raising the competitive power of the smaller companies operating in low-cost nations, thereby increasing revenue and margin loss risks for Actuant.

The Zacks Consensus Estimate for the stock has remained unchanged for fiscal 2017 and 2018, in the last 60 days.

ACTUANT CORP Price and Consensus

ACTUANT CORP Price and Consensus | ACTUANT CORP Quote

Stocks to Consider

Better-ranked stocks within the industry are listed below:

ACCO Brands Corp. ACCO, which has an average positive earnings surprise of 23.93% for the trailing four quarters, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies, Inc. AIT currently carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 4.93% for the trailing four quarters.

Alarm.Com Holdings, Inc. ALRM currently has a Zacks Rank #2, with an average positive earnings surprise of 165.56% for the trailing four quarters.

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Zacks Investment Research
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