Here's Why It Is Worth Holding On To Actuant (ATU) Stock Now
Zacks Investment Research | Jun 07, 2019 08:30AM ET
We issued an updated research report on Actuant Corporation (NYSE:ATU) on Jun 7. The industrial tool maker seems well-positioned to gain from its initiatives but some near-term hurdles might be concerning.
The company currently carries a Zacks Rank #3 (Hold) and has a market capitalization of approximately $1.5 billion.
A few growth drivers and certain headwinds, which might influence Actuant, have been discussed below.
Factors Favoring Actuant
Strategic Actions: The company aims to boost its performance on stronger innovation, portfolio-management moves and diligent restructuring initiatives. It anticipates top-line tailwinds from the integration of Hydratight and Enerpac businesses. Also, restructuring initiatives will help in lowering costs through headcount reductions, operational improvements and facility consolidations.
Actuant intends to sell the Engineered Components & Systems segment to develop a sound industrial tool business.
Inorganic Moves: The company seems to favor acquisitions and divestment of businesses to fortify its product portfolio. Mirage Machines, acquired in December 2017, and Equalizer, bought in May 2018, have been strengthening Actuant's energy and industrial businesses, respectively.
The company divested its Cortland Fibron and Precision-Hayes International businesses in December 2018.
Projections: Actuant’s focus on product development, improving operational efficiency and portfolio-restructuring measures are likely to create tailwinds in fiscal 2019. Adjusted earnings per share for the year are predicted to be $1.09-$1.20, above $1.09 recorded in the previous year. Also, core sales are anticipated to grow 3-5%, including 3-5% improvement expected for the Industrial Tools & Services segment and 2-5% for the Engineered Components & Systems segment.
Factors Working Against Actuant
Share Price Movements & Valuation: Market sentiments seem to be working against the company. In the past three months, Actuant’s share price has declined 0.4% against the Zacks Investment Research
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