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Manitowoc (MTW) Up 56% in 3 Months: What’s Driving the Stock?


Shares of The Manitowoc Company, Inc. MTW have been performing well of late. The provider of engineered lifting equipment for the global construction industry has witnessed its shares surge around 56% in the past three months. The company has also outperformed its industry’s gain of 19%.

Manitowoc has a market cap of roughly $1.28 billion and average volume of shares traded in the last three months is around 1.78 million. The company has an average positive earnings surprise of 55.9% in the trailing four quarters.

Let’s take a look into the factors that are driving this Zacks Rank #2 (Buy) stock of late.

Driving Factors

Investors are optimistic on Manitowoc’s focus on consolidating manufacturing footprint and reducing cost of organizational structure. These actions also helped Manitowoc return to profit in the second quarter of 2017 after incurring losses for straight three quarters due to weak crane demand.

Manitowoc is making significant progress in the implementation of the Manitowoc Way to drive four key strategic priorities. The first part of the strategy is margin expansion. The relocation of crawler crane manufacturing in the United States is complete. The move has an estimated pre-tax cost savings of $25-$30 million. The shifting will help eliminate significant excess capacity and help drive operational efficiency. Moreover, the tower crane relocation to Portugal remains on schedule. The company also remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste.

Further, it remains firm on introducing new products and services that deliver enhanced productivity to generate greater return on investment for customers. Thirdly, it aims to focus on gaining market share through innovation. Lastly, the company will utilize the strengthened balance sheet to allocate capital for most accretive options such as de-leveraging, organic investments, stock buybacks and external growth.

Recently, the company announced plans to put into effect the reverse stock split at a ratio of 1-for-4 of its shares, which will reduce the number of shares from 300- million to 75 million and increase its price. Manitowoc will utilize its solid balance sheet to allocate capital for most accretive options such as de-leveraging, organic investments, stock buybacks and external growth.

Estimates Moving Up

Positive estimate revisions reflect optimism in the company’s potential as earnings growth is often an indication of robust prospects (and stock price gains) ahead. Estimates for Manitowoc have moved up in the past 60 days, reflecting analysts’ optimistic outlook.

The Zacks Consensus Estimate for 2017 is pegged at a loss of 14 cents per share, an improvement from the previous projection of a loss of 33 cents, 90 days ago. The Zacks Consensus Estimate for 2018 has moved up to 7 cents from the prior expectation of breakeven results.

Other Stocks to Consider

Some other top-ranked stocks in the same sector AGCO Corporation AGCO, II-VI Incorporated IIVI and Alarm.Com Holdings, Inc. ALRM. All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO Corporation has an average positive earnings surprise of 39.7% in the trailing four quarters.

II-VI Incorporated has an average positive earnings surprise of 50.4% in the trailing four quarters.

Alarm.Com has an average positive earnings surprise of 73.1% in the trailing four quarters.

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