Manitowoc (NYSE:MTW) – a Rising Star in Fund’s and Mangers’ Portfolio

Beginning the calendar year 2017 with a almost flat performance, Manitowoc Company Inc (NYSE:MTW) began its uptrend from August 2017. Notably, in August two analyst upgrades – Neutral to Outperform by Baird and JP Morgan raising to Neutral from Underweight – supported to push the company’s stock price higher by almost 39% in August alone. Meanwhile, in the past three months the stock’s performance recorded a significant 28.1% gain peaking to 52-week high levels and average daily trading volumes soaring to heights. On a year to date basis, MTW stock price gain stands at 63.2%.

Turnaround factors

A dry U.S. construction market and poor financial performance did not support the company initially, however, with the Trump administration promising to spend $1 trillion on infrastructure and the overall improving industry trends, MTW stock performance outperformed the industry performance (26%) in the past three months.

Industry analysts also highlight MTW return to financial profitability as a catalyst to rising share price. Meanwhile, tracing back to December 2014 Carl Icahn 7.7% investment stake in MTW also turned out to be a major turnaround factor. Post his entry in Manitowoc, the company’s foodservice division had a successful spin off and the crane business shifted its base to Shady Grove, PA from Manitowoc thereby driving the company to achieve cost savings.

Journey from loss to profit levels

Manitowoc reversed its losses and posted significant profits in the first two quarters of the year mainly led by strong crane demand, consolidation of manufacturing unit and optimizing organizational structure cost. Third quarter adjusted earnings stood at 9 cents per share, a reversal from the prior-year quarter’s loss of 28 cents, driven by stable demand from energy and commercial construction markets in American and European markets. Orders stood higher by 21% from year ago period while backlog rose 32%.

Looking ahead, for the full year MTW updated its prior guidance of 8% to 10% fall in revenue to a 5% to 7% drop, and adjusted EBITDA is now seen at $59 to $69 million compared to earlier forecasted $41 to $59 million.

Innovation in its product development, performing business processes swiftly are part of the key strategic initiatives that MTW is looking at to remain competitive and continue its positive financial performance. Besides, it is also stepping towards gaining a bigger market share through strengthening of distribution network and improved partnerships.

Recent moves

With effect November 20, 2017, Manitowoc consolidated its available shares through a reverse stock split by combining every four shares into one thereby reducing the total shares to 75 million from 300 million. With regards the stock split effect, instead of issuing fractional shares MTW will generate a cash payment to the shareholders who are entitled for fractional shares.

Top fund holders and analyst ratings

As per the released data, Manitowoc institutional sentiment in the second quarter 2017 increased to 1.01 from 0.98 in first quarter mainly as 70 investment managers initiated or increased stock positions attracted by stable financial performance and significant stock price gains. Vanguard Group Inc, Icahn Carl C, Firefly Value Partners LP, Dimensional Fund Advisors LP, BlackRock Inc, Southpoint Capital Advisors LP, Harris Associates LP, Franklin Resources Inc, Rutabaga Capital Management LLC and FMR LLC are the top ten based on highest shares held. Among the above stated, based on portfolio percentage, Firefly, Rutabaga Capital and Southpoint Capital are the top holders with MTW accounting for 8.52%, 5.96% and 2.59% of its total portfolio holdings.

Based on consensus recommendations of analysts polled by Nasdaq, MTW has STRONG BUY rating from four analysts while five analysts suggest a HOLD rating.

Published by
Khyathi Dalal, Contributing Editor

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