What happened

The market continued to lift cranes specialist Manitowoc Co.'s (NYSE:MTW) stock higher in last month, driving it up by 5.8% to extend its year-to-date gains to a staggering 60% as of Oct. 31. When a stock surges despite a lack of news out of the company, macro factors are usually at play.

So what

Manitowoc had a rough couple of years after it began operating as a standalone crane company following the spinoff of its food service equipment business. The construction equipment industry is cyclical, so volatility in its earnings was to be expected. But the pressure on the cranes segment wasn't as apparent prior to the split, when higher margins from what is now Manitowoc Foodservice were available to offset much of the weakness on the construction side.

Now that Manitowoc is on its own, it desperately needs healthier construction markets to boost its profits. Not surprisingly, when industry leader Caterpillar Inc. (NYSE:CAT) reported strong third-quarter numbers last month and confirmed strength in important regions like China, and key industries like oil and gas, investors in Manitowoc became hopeful.

A crane.

Image source: Getty Images.

It also helped that Manitowoc had delivered strong second-quarter numbers some months ago. Caterpillar's Q3 performance and an outlook upgrade further confirmed that the recovery is real, giving the market the perfect opportunity to bid Manitowoc stock higher in anticipation of encouraging numbers when the company reports this week.

Now what

Earlier this month, RBC upgradedManitowoc stock to outperform, upping its price target on the stock by a whopping 60% to $12. Since then, the stock has already jumped by double-digit percentages. That makes the company's upcoming Q3 earnings report even more crucial.

What I'm going to watch for, though, is what management has to say about their planned 1-for-4 reverse stock split --meaning you'll get one share for every four shares held currently -- during its upcoming earnings call. Because Manitowoc isn't facing any threat of delisting, the only motive behind the move could be to boost the share price even as the crane maker strives to find its footing and break even.

But given the stock's recent rally, will management still want to go ahead with the reverse split? If yes, there could be more to matters than meets the eye, and investors need to be watchful.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.