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Category: Stock Market and Altra Motion
Date: 27 October 2019 Stock Price: $29.72 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Altra Motion a designer and producer of a wide range of motion control and power transmission solutions.
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About Altra Motion
Altra is a premier global designer and producer of a wide range of motion control and power transmission solutions. With engineered components and systems that provide the essential control of equipment speed, torque, positioning, and other functions, Altra products can be used in nearly any machine, process or application involving motion.
Our products are marketed under a variety of well recognized and established brands, including: Ameridrives, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Jacobs Vehicle Systems, Kilian, Kollmorgen, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Portescap, Stieber, Stromag, Svendborg Brakes, Thomson, TB Wood's, Twiflex, Warner Electric, Warner Linear and Wichita Clutch.
With approximately 10,000 employees and over 50 manufacturing facilities, Altra operates in four reporting segments consisting of seven operating companies. Our diverse product offering includes clutches & brakes, precision motors, automation solutions, linear systems, engineered gear drives, and various mechanical and electrical components.
Our products are marketed under a variety of well recognized and established brands, including: Ameridrives, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Jacobs Vehicle Systems, Kilian, Kollmorgen, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Portescap, Stieber, Stromag, Svendborg Brakes, Thomson, TB Wood's, Twiflex, Warner Electric, Warner Linear and Wichita Clutch.
With approximately 10,000 employees and over 50 manufacturing facilities, Altra operates in four reporting segments consisting of seven operating companies. Our diverse product offering includes clutches & brakes, precision motors, automation solutions, linear systems, engineered gear drives, and various mechanical and electrical components.
Overview of Altra Motion's 3rd quarter 2019 earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenues: $442.9 million (up from $228.5 million for the same period of the previous year)
- Revenues increased by 93.8% over the last 12 months
- Cost of sales: $285.9 million (up from $156.5 million for the same period of the previous year)
- Cost of sales increased by 82.6% over the last 12 months
- Net income: $25.7 million (up $12.3 million from for the same period of the previous year)
- Diluted earnings per share: $0.40 (down from $0.41 for the same period of the previous year)
- Diluted weighted-average shares outstanding: 64.6 million (up from 29 million for the same period of the previous year)
- Cash and cash equivalents: $168 million
- Cash and cash equivalents per share: $2.6
- Cash and cash equivalents makes up 8.75% of Altra Motion's market capital
- Cash and cash equivalents makes up 3.91% of Altra Motion's total assets
- Goodwill: $1.658 billion
- Goodwill per share: $25.67
- Goodwill makes up 38.6% of Altra Motion's total assets
- Stockholders equity in Altra Motion $1.867 billion
- Stockholders equity per share in Altra Motion : $28.90
- So Altra Motion is trading at 1.02 times its stockholders equity per share which is outside the expected range of between 2 and 4 most firms tend to trade at
Altra Motion's management commentary on their 3rd quarter 2019 results
BRAINTREE, Mass., Oct. 24, 2019 (GLOBE NEWSWIRE) -- Altra Industrial Motion Corp. (Nasdaq: AIMC) (“Altra” or the “Company”), a leading global manufacturer and supplier of motion control, power transmission and automation products, today announced unaudited financial results for the third quarter ended September 30, 2019. Except where otherwise noted, financial results for the third quarter of 2019 include the A&S business whereas results for the prior year period do not include financial results of the A&S business on a proforma basis.
“Despite pressure on the topline, our third-quarter performance was highlighted by our exceptional operating results and working capital improvements which delivered strong cash flow from operations and record free cash flow as well as strong earnings,” said Carl Christenson, Altra’s Chairman and Chief Executive Officer. “On a sequential basis, although third-quarter sales declined $24 million, non-GAAP Operating Income was down only $6.0 million, or 25% of the sales decline, as the benefits of our cost actions and synergies helped mitigate the impact of topline declines. Our ongoing focus on cash management yielded strong cash flow from operations and a record $71.5 million of free cash flow in the third quarter, which is nearly equal to the amount of free cash flow that we generated in the entire first half of the year. The team also did an excellent job delivering $25 million of working capital improvements in the third-quarter.*”
Third-quarter revenue came in short of expectations due largely to greater than anticipated headwinds in the global industrial economy. This was partially offset by ongoing strength across the renewable energy and aerospace and defense end markets. We expect the challenging market environment to continue into the foreseeable future and have reflected this in our revised 2019 guidance and preliminary 2020 outlook.
It has now been a year since we completed the transformative merger with A&S and we remain excited by the opportunity we have to leverage this powerful combination and realize our full potential as a premier industrial company,” continued Christenson. “As we navigate through the current macro headwinds, we are focused on cost containment, while working to ensure that we protect the long term growth opportunities for the business. In addition, we remain committed to delivering the synergies and de-levering the balance sheet with our strong free cash flow.”
“There continues to be a tremendous amount of uncertainty in regards to the industrial economy,” said Christenson. “In the near term, we expect this uncertainty will limit investment. Assuming business conditions are similar to what we are experiencing in the second half of 2019, we expect 2020 sales in the range of 2% to 4% below 2019, with a more significant decline in the first half of the year due to the more difficult comparables. We remain focused on accelerating our activities to achieve our long-term goals of being recognized as a premier industrial company,” concluded Christenson.
“Despite pressure on the topline, our third-quarter performance was highlighted by our exceptional operating results and working capital improvements which delivered strong cash flow from operations and record free cash flow as well as strong earnings,” said Carl Christenson, Altra’s Chairman and Chief Executive Officer. “On a sequential basis, although third-quarter sales declined $24 million, non-GAAP Operating Income was down only $6.0 million, or 25% of the sales decline, as the benefits of our cost actions and synergies helped mitigate the impact of topline declines. Our ongoing focus on cash management yielded strong cash flow from operations and a record $71.5 million of free cash flow in the third quarter, which is nearly equal to the amount of free cash flow that we generated in the entire first half of the year. The team also did an excellent job delivering $25 million of working capital improvements in the third-quarter.*”
Third-quarter revenue came in short of expectations due largely to greater than anticipated headwinds in the global industrial economy. This was partially offset by ongoing strength across the renewable energy and aerospace and defense end markets. We expect the challenging market environment to continue into the foreseeable future and have reflected this in our revised 2019 guidance and preliminary 2020 outlook.
It has now been a year since we completed the transformative merger with A&S and we remain excited by the opportunity we have to leverage this powerful combination and realize our full potential as a premier industrial company,” continued Christenson. “As we navigate through the current macro headwinds, we are focused on cost containment, while working to ensure that we protect the long term growth opportunities for the business. In addition, we remain committed to delivering the synergies and de-levering the balance sheet with our strong free cash flow.”
“There continues to be a tremendous amount of uncertainty in regards to the industrial economy,” said Christenson. “In the near term, we expect this uncertainty will limit investment. Assuming business conditions are similar to what we are experiencing in the second half of 2019, we expect 2020 sales in the range of 2% to 4% below 2019, with a more significant decline in the first half of the year due to the more difficult comparables. We remain focused on accelerating our activities to achieve our long-term goals of being recognized as a premier industrial company,” concluded Christenson.
Altra Motion (NASDAQ: AIMC) stock price history
The image below, obtained from Google, shows the stock price history of Altra Motion over the last 5 years. And it's not been a good time for Altra Motion's stockholders. 5 years ago the stock was trading at around $31.50 a stock and its currently trading at $29.72 a stock. That's a negative return of -5.65% provided to Altra Motion's stockholders over the last 5 years. The opportunity cost of holding Altra Motion's stock instead of say Netflix that returned over 300% over a 5 year period becomes significant.
The stock of Altra Motion is trading at a lot closer to its 52 week low of $23.52 than it is to its 52 week high of $38.15 which to us is a clear indication that the short term sentiment and momentum of Altra Motion stock is negative.
The stock of Altra Motion is trading at a lot closer to its 52 week low of $23.52 than it is to its 52 week high of $38.15 which to us is a clear indication that the short term sentiment and momentum of Altra Motion stock is negative.
Recent coverage of Altra Motion
The extract below discusses the latest news regarding Altra Motion and their latest dividend declaration as obtained from TheStreet,com
BRAINTREE, Mass., Oct. 22, 2019 (GLOBE NEWSWIRE) -- Altra Industrial Motion Corp. (Nasdaq: AIMC ), a leading global manufacturer and supplier of motion control, power transmission and automation products, today announced that its Board of Directors has approved the payment of a quarterly cash dividend of $0.17 per share for the fourth quarter of 2019. This is the thirty-first consecutive dividend in the Company's history. The dividend will be paid on January 3, 2020 to shareholders of record as of the close of business on December 18, 2019. Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board's continuing determination that the declaration of dividends are in the best interests of Altra's shareholders and are in compliance with all laws and agreements of Altra applicable to the declaration and payment of cash dividends. Future dividends may be adjusted at the Board's discretion based on market conditions and capital availability.
BRAINTREE, Mass., Oct. 22, 2019 (GLOBE NEWSWIRE) -- Altra Industrial Motion Corp. (Nasdaq: AIMC ), a leading global manufacturer and supplier of motion control, power transmission and automation products, today announced that its Board of Directors has approved the payment of a quarterly cash dividend of $0.17 per share for the fourth quarter of 2019. This is the thirty-first consecutive dividend in the Company's history. The dividend will be paid on January 3, 2020 to shareholders of record as of the close of business on December 18, 2019. Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board's continuing determination that the declaration of dividends are in the best interests of Altra's shareholders and are in compliance with all laws and agreements of Altra applicable to the declaration and payment of cash dividends. Future dividends may be adjusted at the Board's discretion based on market conditions and capital availability.
Altra Motion (NASDAQ: AIMC) latest stock valuation
So what is Altra Motion stock worth based on the release of their latest earnings report? Based on the earnings report provided by Altra Motion our our valuation models provide a target (full value) price for Altra Motion stock at $28.60 a stock. We therefore believe that the stock of Altra Motion is close to being fully valued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $28.60. Therefore we believe a good entry point into Altra Motion stock is at $25.80 or below. We expect the stock price of Altra Motion to pull back slightly from current levels to levels closer to our target (full value) price in coming weeks and months and then continue to trade sideways around our target (full value) price.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $28.60. Therefore we believe a good entry point into Altra Motion stock is at $25.80 or below. We expect the stock price of Altra Motion to pull back slightly from current levels to levels closer to our target (full value) price in coming weeks and months and then continue to trade sideways around our target (full value) price.
Next earnings release date for Altra Motion
It is expected that Altra Motion's 4th quarter and full year results of their 2019 fiscal year will be released in late January 2020.