Actuant (ATU +0.19%) will release its quarterly report on Tuesday, and the maker of hydraulics and specialized products for the energy markets has taken steps to refocus on what it sees as its most promising prospects. The stock has reacted favorably, climbing to all-time record highs. But the question investors face is whether the benefits of the moves will also show up in Actuant earnings growth.
Actuant has identified four major areas where it expects to see the most growth. Those areas include energy, infrastructure, farm productivity, and natural resources. In order to align its business with those high-growth areas, Actuant has had to make some big moves in the past several months that will have wide-ranging implications for the way it does business. Let's take an early look at what's been happening with Actuant over the past quarter and what we're likely to see in its report.
Stats on Actuant
|
Analyst EPS Estimate |
$0.50 |
|
Change From Year-Ago EPS |
4.2% |
|
Revenue Estimate |
$328.79 million |
|
Change From Year-Ago Revenue |
(19%) |
|
Earnings Beats in Past Four Quarters |
1 |
Source: Yahoo! Finance.
Will Actuant earnings keep climbing this quarter?
In recent months, analysts have had mixed views on Actuant earnings. They've cut a penny per share from their August-quarter estimates, but they've added $0.02 per share to their projections for the 2014 fiscal year. The stock, meanwhile, has reacted favorably to recent changes, climbing 22% since late June.
Actuant has made some major strategic shifts lately. Back in June, the company said it would sell off its electrical division, which includes brand names like Mastervolt and Turner Electric. That move led to a non-cash charge in Actuant's May quarter of $150 million to reflect the divestiture, which the company expects to complete during the next fiscal year.
Then last month, Actuant became a buyer, acquiring offshore oil-and-gas support specialist Viking SeaTech for about $225 million. The move fits well with Actuant's broader strategy and should help it bolster its existing relationships with Statoil (STO +1.22%), Baker Hughes (BHI +0.00%), and other leading energy companies. Statoil has worked hard on a number of offshore projects lately, both near its Norwegian base of operations and around the world. Baker Hughes has both land-based and offshore oil services capabilities, and although it isn't as big as some of its rivals, Baker Hughes nevertheless has plenty of growth potential.
Still, one question facing Actuant involves its leadership. CEO Robert Arzbaecher said that he would resign in January, making way for current COO Mark Goldstein to take over the chief-executive role. By staying internal, Actuant shouldn't see much disruption to its overall business, but with all the changes in its business mix, the company needs solid leadership to move forward.
In the Actuant earnings report, watch to see whether Goldstein steps up to take a more active role in the discussion of the company's results and strategic vision. With so much riding on its big moves recently, Actuant needs to demonstrate that its business shift will boost profits and build loyalty for its core segments in the future.
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