Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Actuant To Divest Segment, Focus On Industrial Tool Business

By Zacks Investment ResearchStock MarketsJan 28, 2019 03:42AM ET
www.investing.com/analysis/actuant-to-divest-segment-focus-on-industrial-tool-business-200379871
Actuant To Divest Segment, Focus On Industrial Tool Business
By Zacks Investment Research   |  Jan 28, 2019 03:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Actuant Corporation (NYSE:ATU) recently announced its intention to divest its Engineered Components & Systems (EC&S) segment in an effort to completely focus on its Industrial Tools & Services (IT&S) segment. The announcement came after the sale of the company’s Precision-Hayes International businesses and the successful realignment of its business operations into EC&S and IT&S segments. The strategic move is in sync with its transformation plan to become a pure play industrial tools and services company.

The company’s EC&S segment is engaged in serving on and off-highway Original Equipment Manufacturers. Notably, the segment consists of highly engineered components of agriculture, transportation, construction and other vertical markets offered by the company. The IT&S segment is a leading provider of high-force hydraulic tools and equipment for diverse industrial and infrastructure markets. The segment includes primary business, Enerpac, which enables it to generate high operating profit margins and solid core sales.

Actuant believes the divestment will allow it to solely focus on its best-performing business and provide higher returns to shareholders. Notably, with the divestment, the company intends to create a leading industrial tool company and generate earnings before interest, tax, depreciation and amortization margins of more than 20% over time.

Our Take

Actuant believes that elevated demand for recently-launched products and ongoing investments made in core businesses, pricing initiatives and strength in Tools business will boost its near-term revenues. This along with greater operational efficacy is expected to improve profitability in the quarters ahead. For fiscal 2019 (ending August 2019), the company currently anticipates generating organic revenue growth in the range of 3-5%.

In the past month, the Zacks Rank #3 (Hold) stock has yielded 6.2% return, outperforming the industry’s rise of 3.6%.

However, material cost inflation has been an issue for Actuant, of late. The Section 232 and 301 tariffs levied on certain U.S. imported products (like steel and aluminium) have significantly escalated raw material expenses for the company. Notably, the company expects that material cost inflation will adversely impact its business by nearly $10 million in fiscal 2019.

Key Picks

Some better-ranked stocks in the Zacks Industrial Products sector are listed below:

DXP Enterprises, Inc. (NASDAQ:DXPE) sports a Zacks Rank #1 (Strong Buy). The company pulled off a positive average earnings surprise of 112.62% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore International Group Inc. (NYSE:ATKR) also carries a Zacks Rank of 1. The company generated a positive average earnings surprise of 27.58% in the trailing four quarters.

iRobot Corporation (NASDAQ:IRBT) flaunts a Zacks Rank of 1. The company delivered a positive average earnings surprise of 102.97% in the last four quarters.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>



Atkore International Group Inc. (ATKR): Free Stock Analysis Report

iRobot Corporation (IRBT): Free Stock Analysis Report

Actuant Corporation (ATU): Free Stock Analysis Report

DXP Enterprises, Inc. (DXPE): Free Stock Analysis Report

Original post

Zacks Investment Research
Actuant To Divest Segment, Focus On Industrial Tool Business
 

Related Articles

Actuant To Divest Segment, Focus On Industrial Tool Business

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email