Manitowoc Posts Smaller Loss Than Feared, Reinstates Guidance; Shares Jump 8%

Shares of Manitowoc Co. jumped more than 8% in Wednesday’s late trading session after the producer of construction trains posted a smaller quarterly loss than expected and reinstated its guidance as orders pick up faster.

Manitowoc (MTW) lost $0.01 per diluted share in the three months ended Sept. 30, after earning $0.51 a share in the year-ago quarter. Analysts had forecast a loss of $0.32 per share. Revenue in the third quarter dropped 20.6% year-over-year to $355.6 million, but exceeded the Street consensus of $313 million.

Moreover, third-quarter orders of $389.9 million climbed 10.5% from the prior year. Backlog as of September 30, totaled $464.8 million, almost flat compared to the prior year and reflecting an increase of 8% from June 30 this year.

“Our third-quarter results were led by stronger than anticipated orders. We continue to manage our costs and production schedules tightly, and I was very pleased with our operational execution and cash generation in the period,” commented Manitowoc CEO Aaron H. Ravenscroft. “We ended the third quarter with nearly $400 million of liquidity. In spite of the challenging environment, we continue to invest in the future. Our new product development programs remain on-track, and we have begun to invest in organic strategies to grow sales.”

Ravenscroft disclosed that the company is looking to “pursue acquisitions once the overall economic environment stabilizes”. Founded in 1902,Manitowoc is a provider of engineered lifting solutions, which through its wholly-owned subsidiaries, produces mobile telescopic cranes, tower cranes, lattice-boom crawler cranes and boom trucks.

Despite continued “significant uncertainty” in the markets, Manitowoc reinstated its guidance, saying that its “line of sight” to fourth-quarter results have improved. The company had suspended its 2020 guidance on March 27, citing the significant uncertainty around the future impact that COVID-19 would have on its end market demand and supply chain. Manitowoc now expects fourth-quarter revenue to land between $425 million and $450 million on adjusted EBITDA of between $18 million and $23 million. Analysts had been looking for fourth-quarter revenue of $360 million.

Ahead of the earnings results, Citigroup analyst Timothy Thein reduced the stock’s price target to $10 (29% upside potential) from $12 and maintained a Hold rating, saying that soft crane rental rates across many geographies are likely to keep crane buyers on the sidelines.

Thein pointed out that key geographies are being hit by second waves of COVID-19, adding uncertainty and further postponing purchase. Therefore, the analyst views MTW’s risk/reward as balanced at current share levels. (See MTW stock analysis on TipRanks)

The rest of the Street shares Thein’s stock outlook. The Hold analyst consensus shows 5 Hold ratings versus only 1 Buy rating. With shares tumbling 55% since the start of the year, the $12.50 average analyst price target implies 61% upside potential lies ahead.

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