In this article, we are looking at another interesting stock in the Clear Mid Cap Growth Index which is licensed for the Claymore issued ETF (MCG). The Wisconsin-based Manitowoc Corp. (MTW) is also a holding in the Clear Mid Cap Growth portfolio. MTW operates in three unique business segments. It is a manufacturer of cranes and related products, equipment for the food services industry, and marine vessels.
Founded in 1902, the company has been able to grow to a market capitalization of over $4.5 billion. Its growth expanded from its original operations of ship building, extended to building cranes in 1925, and then food service equipment after WWII. A part of American history, MTW was a pioneer in the steel industry and contributed to the boom of the last century. Since then, it been focusing on growing as a global corporation and currently has operations in over 20 countries.
The company builds a variety of different crane products that are used in applications that include petrochemical projects, infrastructure development, and commercial and high-rise residential construction. The food service division concentrates on ice-making machines as well as a variety of commercial refrigerators and freezers. It did not dismiss its original business, the marine division, which has grown to construct commercial and government vessels through three shipyards.
With the growth in demand of both steel and building equipment particularly in the Middle East and the Asia-Pacific Rim, MTW is set on expanding its business. Aside from growing globally, it has been also focused on developing its domestic contracts. Last year, it was awarded a multi-year contract with the U.S. Coast Guard for the construction and delivery of up to 250 vessels for a total contract value of up to $600 million. Earlier this year, the company acquired a line of mobile industrial cranes, strengthening its position in industrial building.
MTW fundamentals have benefited from its successful history and recent expansion, with a quarterly year-over-year revenue growth of 36.20% compared to the industry average of 14.20%. At the same time, the company was able to amass a trailing twelve month net income of over $200 million. Profitability has also kept slightly above pace. MTW's operating margins of 10.99% is above the 9.61% industry average. More impressive is its 28.20% return on equity, which is outperforming its peer group average of 13.10%.
For many investors, at first glance, MTW may seem to be slightly overvalued when based on its price to earnings (P/E) ratio of 23.73, as compared to an industry average of 21.60. Upon a closer examination, and by factoring the additional calculation of earnings growth produces a price to earnings to growth [PEG] ratio of 0.87, far besting the industry average of 1.43. Its sound business performance, as evidenced in recent news and fundamental data, indicates room for further positive price movement.
Disclosure: Mr. Corn is CEO of Clear Indexes LLC and Clear Asset Management LLC. Manitowoc Corp. is a constituent in the Clear Mid Cap Growth Index licensed for the ETF [MCG]. It is also a holding in the Clear Mid Cap Growth portfolio.
Mr. Corn owns shares of MCG and MTW directly through his participation in the portfolio.
MTW 1-yr chart