Actuant Gets Twenty Lashes (ATU)
xoActuant, which makes motor control systems for applications such as industrial tools and auto parts, announced earnings today. The company promptly took a beating with its stock off 20% to $45.60, well down from its 12-month high of $67.60.
Revenue for the period ending May 31 was $316.6 million up from $271.7 in the quarter a year ago. Operating profit rose from $33.9 million last year to $42.8 million. Revenue at the company's tools and supplies division rose 22% and engineering solutions rose 9%. The company had $52 million in cash flow.
But Wall Street hated the guidance, which is a bit hard to understand. Revenue in the next quarter will be flat at $310 to $320 million. It sounds bad at first, but it is 15% to 19% better than the same quarter last year, and EPS is forecast to be 16% to 24% better. The company did, however, guide for slow sales growth in the next fiscal, 2007. The percentage increase should be about 10%.
Bear Stearns said it was disappointed with the forecast, but the sales increase was impressive and 10% next year is hardly a disaster. The company's market cap is now down by about a third in a little over a month, and that is too much.
From fiscal 2003 (August 31) to fiscal 2005, revenue was up 66%. The four quarters previous to the one just announced had average revenue of $275, so the current quarter was a significant improvement. The company's operating margin has been running around 13%.
Under the circumstances, it seems reasonable that the stock is not back at $67, but, with a forward PE of 13, the stock has dropped to bargain range.
Douglas A McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in any of the companies he writes about.
Revenue for the period ending May 31 was $316.6 million up from $271.7 in the quarter a year ago. Operating profit rose from $33.9 million last year to $42.8 million. Revenue at the company's tools and supplies division rose 22% and engineering solutions rose 9%. The company had $52 million in cash flow.
But Wall Street hated the guidance, which is a bit hard to understand. Revenue in the next quarter will be flat at $310 to $320 million. It sounds bad at first, but it is 15% to 19% better than the same quarter last year, and EPS is forecast to be 16% to 24% better. The company did, however, guide for slow sales growth in the next fiscal, 2007. The percentage increase should be about 10%.
Bear Stearns said it was disappointed with the forecast, but the sales increase was impressive and 10% next year is hardly a disaster. The company's market cap is now down by about a third in a little over a month, and that is too much.
From fiscal 2003 (August 31) to fiscal 2005, revenue was up 66%. The four quarters previous to the one just announced had average revenue of $275, so the current quarter was a significant improvement. The company's operating margin has been running around 13%.
Under the circumstances, it seems reasonable that the stock is not back at $67, but, with a forward PE of 13, the stock has dropped to bargain range.
Douglas A McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in any of the companies he writes about.
posted by douglas mcintyre at 2:36 PM
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