Joy Global Downgraded to Neutral - Analyst Blog
27 Setembro 2011 - 10:39AM
Zacks
We have downgraded our rating on mining equipment manufacturer
and service provider Joy Global Inc. (JOYG) from
Outperform to Neutral.
Joy Global's exposure to the wide international market accounted
for more than 50% of its total revenues in the three preceding
financial years. However, the wide overseas footprint exposes the
company to various political, economic, and other uncertainties. We
believe any significant dip in international sales will adversely
impact the top line of the company.
The company, to a large extent, depends on third-party vendors
for raw materials required to build its equipment and as Joy Global
operates with very little inventory (just-in-time practices), this
leaves the company susceptible to supply bottlenecks such as
capacity, labor issues and other non-controllable events.
The positive catalysts for the company are its solid backlog and
continued cost management initiatives, which position Joy Global to
stay ahead of the curve. The company is also positioned well to
take advantage of improving order trends from the US, China and
India.
The mining industry is however undergoing consolidation, which
limits the number of consumers for the company. This will have an
adverse impact on top-line generation. At the end, despite the few
positives favoring the company, in the balance, the risks loom
large. Hence, we downgrade the stock to Neutral.
Looking Ahead
Joy Global expects earnings per share for 2011 to be in the
range of $5.70 to $6.00. The Zacks Consensus expectation for the
year is $5.86 per share.
Joy Global currently retains a Zacks #3 Rank, which translates
into a short-term Strong Hold rating. Joy Global competes with
another industry behemoth Caterpillar Inc.
(CAT).
Joy Global Inc. is based in Milwaukee, Wisconsin and caters to
consumers all around the world. The company provides manufacturing,
distributing and servicing equipment for surface mining, through
its P&H Mining Equipment division, underground mining, through
its Joy Mining Machinery division and bulk material conveyor
systems, through its Continental Crushing & Conveying
division.
CATERPILLAR INC (CAT): Free Stock Analysis Report
JOY GLOBAL INC (JOYG): Free Stock Analysis Report
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