Altra Industrial (AIMC) Now A Strong Buy: Should You Add?

Zacks Investment Research upgraded Altra Industrial Motion Corp. (NASDAQ:AIMC) to a Zacks Rank #1 (Strong Buy) on Jun 22, 2016. Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of outperforming the broader market over the next few quarters.

Why the Upgrade?

Market sentiments have been favoring Altra Industrial Motion, as evident from the year-to-date return of roughly 12.4%. Also, the company performed well in the past four quarters, with a positive average earnings surprise of 7.28%.

We believe Altra Industrial Motion stands to benefit from its diversified product portfolio and large customer base. For 2016, the company anticipates difficult operating conditions in the global industrial markets to ease in the second-half of the year. Sales are expected to be within $700−$720 million, while non-GAAP earnings are anticipated in a range of $1.40−$1.50 per share.

In addition, Altra Industrial Motion has initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with current demand levels. The company intends to lower the number of its facilities by 20−30% as well as improve its supply chain worldwide. As part of these restructuring activities, the company is on track to complete six consolidations in second-quarter 2016 and anticipates announcing the seventh consolidation in the third quarter.

Impressive financial results and future outlook have boosted investors’ optimism regarding Altra Industrial Motion’s prospects. Over the last 60 days, the Zacks Consensus Estimate for the stock has increased 2.8% to $1.49 per share for 2016 and 4.9% to $1.70 per share for 2017.

Other Stocks to Consider

Altra Industrial Motion currently has a market capitalization of approximately $724 million. Some similarly-ranked stocks in the machinery industry include Gorman-Rupp Co. (NYSE:GRC) , Kadant Inc. (NYSE:KAI) and Nordson Corporation (NASDAQ:NDSN) .