Manitowoc announced earnings last night of 51 cents per share. The company missed analyst earnings expectations of 57 cents per share. The good news is that Manitowoc had a 16% jump in sales and expects increased revenue from the purchase of food equipment maker Enodis. The bad news is that the 4th quarter resulted in a net loss based on the financing of the Enodis purchase and restructuring charges from the crane making division.
Manitowoc reaffirmed 2009 earnings guidance of $1.35 to $1.60 per share. The stock is currently trading at $6 per share which puts a 4.4 multiple on the stock if the company comes in on the lowest end of guidance. I think that the stock is cheap because the multiple is much lower than other industrial firms. Caterpillar(CAT) expects earnings of $2.50 per share and the stock is trading over $30. Deere(DE) currently trades at $36 on estimated EPS of $4.37 per share. Joy Global(JOYG) is selling for $22 a share with an expected EPS of $3.72. These stocks are trading with multiples of 12, 8, 6.
As you can see Manitowoc trades at a multiple that is much cheaper than other machinery companies. The one company that trades closer to the levels of Manitowoc is Terex(TEX) which is trading at $14 per share on 2009 EPS of $4.00. Caterpillar and Deere look as if they have significant room to decline based on lower earnings. I think that Manitowoc is a good value at $6. The average PE for machinery companies is 6. Manitowoc would need 2009 earnings to drop an additional 25% and EPS to reach $1.02 a share for the stock to be fairly valued at $6 per share. The next year or two may be pretty rocky for Manitowoc but long term I like the shares.
