Has Joy Global Bottomed Out?
Stephen Simpson, CFA
Stephen Simpson, CFA
Joy Global Tries To Beat The Cycle With Better Margins
Stephen Simpson, CFA
Stephen Simpson, CFA
Mon, May 2, 7:55 AM
- April monthly performance was: +2.25%
- $0.24 in dividends were paid in April
- Top 10 Holdings as of 3/31/2016: Targa Resources Corp (TRGP): 1.5%, Cal-Maine Foods Inc (CALM): 1.34%, Covanta Holding Corp (CVA): 1.1%, Innoviva Inc (INVA): 1.09%, Regal Entertainment Group (RGC): 0.94%, Black Hills Corp (BKH): 0.84%, ALLETE Inc (ALE): 0.8%, Pattern Energy Group Inc Class A (PEGI): 0.78%, Joy Global Inc (JOY): 0.74%, The Laclede Group Inc (LG): 0.72%
Mon, Apr. 25, 9:13 AM
- Caterpillar (NYSE:CAT) and Joy Global (NYSE:JOY) are upgraded to Neutral from Sell at Goldman Sachs, which lifts its outlook on the machinery industry to Neutral from Cautious as signs of a China recovery appear to be broadening.
- The sustained recovery in China construction, which has driven iron ore spot 20% higher since February, was unexpected and could drive a recovery in machinery share of mining capex, Goldman analyst Jerry Revich contends; the firm raises its CAT stock price target to $78 from $62.
- Despite concern over JOY’s exposure to high cost mining regions longer-term, Revich sees potential for a capex recovery in the event of continued recovery in China construction; the firm's price target for the shares is lifted to $24 from $13.
- CAT +0.7%, JOY +1% premarket.
- Now read Caterpillar: The worst is over and Caterpillar: It will get worse before it gets better
Mon, Apr. 18, 9:39 AM
Fri, Apr. 15, 3:42 PM
- Recent coal bankruptcies from Peabody Energy and others actually are good news for Joy Global (JOY +4.4%) - indeed a counter-intuitive positive catalyst - Baird's Mircea Dobre and Joseph Grabowski claim.
- The analysts say they take their cue from JOY CEO Ted Doheny, who told them that he views pre-filing behavior as “stressing equipment and suppliers” forcing suppliers to move to cash up front mode in some cases, while post-filing behavior is akin to “stabilization,” particularly when it comes to demand for service and parts, items directly related to current and future customer cash flow generation.
- "The near term remains rocky but be brave... buy," the Baird pair says.
- Now read Is Joy heading for a fresh selloff?
Wed, Apr. 13, 2:24 PM
- Investors should take profits on machinery stocks ahead of earnings, J.P. Morgan analysts say, as valuations are stretched after the sector outperformed the S&P in Q1 +17% vs. +1.3%, and investors likely will have little tolerance for weaker than expected performance.
- The firm suggests avoiding Deere (DE +1.9%), Agco (AGCO +3.5%) and CNH Industrial (CNHI +3%) on weaker fundamentals with downside risk to the market outlooks for each region, and Paccar (PCAR +2.9%) on weaker NAFTA HD truck demand vs. its guide for a 12% decline in U.S. and Canada retail sales.
- However, JPM likes Allison Transmission (ALSN +2.4%) heading into Q1 as it has underperformed peers while its exposure to HD Class 8 long haul is limited and MD orders are up 5% YTD.
- Rated Neutral CAT, MTW, JOY, NAV, TEX, MCRN, PH, KMT, ETN, ITW.
Wed, Apr. 6, 10:45 AM
Mon, Apr. 4, 10:33 AM
- FBR & Co hosted Joy Global (JOY +0.9%) CFO Jim Sullivan last week for insightful NDR meetings, where investors received feedback about the company's strategy in the following areas:
- New growth initiatives - direct service, hard rock & industrial minerals, new product development, and China & high-growth markets.
- Ongoing optimization plan - capacity has been guided to be reduced to supporting a revenue base of $4B-$4.5B.
- Cash generation - management plans to work down inventory over the balance of this year and also into 2017 and 2018.
- U.S. coal commentary - in the very near term, FBR believes Joy's exposure to restructurings in the coal industry will be modest.
- Industry trends - the company estimates that it has been increasing share on the back of its consumables strategy.
- Last month, FBR maintained its Market Perform (Hold) rating on the stock, while lifting its price target to $14.
- FBR Capital Markets is ranked #15,413 out of 35,105 insiders on TipRanks.
- Now read Joy Global: Down, But Not Out
Mon, Mar. 28, 10:33 AM
- JPMorgan’s Ann Duignan and Michael Conlon "remain cautious" on Joy Global (JOY -3.1%) despite the stock's rally this year:
- "We hosted a call with Joy's CFO, Jim Sullivan, to discuss the company’s restructuring actions as well as a look back at the cycle. One of the key points of discussion included a comparison between FY’06 and FY’16E as sales were about the same but profits are expected to be significantly lower."
- "Overall, the CFO noted that its customers have had a more optimistic tone of late, but there has been no real change in the trajectory of orders for JOY."
- "We remain cautious as the stock has rallied YTD +21% (vs. the S&P 500's -0.4%) while the fundamentals remain weak, especially in U.S. and China coal sectors."
Wed, Mar. 16, 11:57 AM
- The bad news coming from Peabody Energy and other coal companies could damage Joy Global (JOY -0.3%), as Axiom Capital analyst Gordon Johnson notes that 59% of JOY's 2015 revenues came from the sale of equipment to coal miners globally.
- "Along these lines, we feel the announcement by BTU today could have incrementally negative implications for JOY’s ability to achieve its FY 2016 guidance,” Johnson writes.
- According to Johnson, JOY’s OEM revenues historically have an 87% correlation to the mining capex of the big five U.S. coal miners: Peabody (BTU -43.6%), Arch Coal (ACI -3.4%), Consol Energy (CNX -1.4%), Alliance Resource Partners (ARLP -0.1%) and Cliff Natural Resources (CLF -8.4%).
Mon, Mar. 14, 2:58 PM
- Joy Global (JOY +3.1%) is higher today but Axiom Capital’s Gordon Johnson argues that JOY is repeating last years' guidance mistakes in 2016 by predicting a back-end loaded year for earnings and revenues.
- Johnson still rates JOY as a Sell, and believes the company is setting itself up for multiple downward revisions later this year.
- JOY’s bookings fell to lows not seen since Q1 2009 at $617M in Q4 2015 from $782M a year ago, forcing the company to eventually cut the degree to which FY 2015 earnings would be back-end loaded, despite reiterated guidance several times during the year, compromising investor confidence and sending the stock tumbling; on JOY’s recently lowered Q1 2016 guidance, "things look oddly similar, yet a bit worse," Johnson says.
Tue, Mar. 8, 9:22 AM
- BMO Capital has increased its price target on Joy Global (NYSE:JOY) to $23 from $16 (but kept its Outperform rating on shares) after the company maintained its full-year guidance and said backlog had increased sequentially for the first time since its 2Q14.
- According to BMO, the stock would be boosted if the company's free cash flow showed signs of bottoming, and the firm's FQ1 results "showed hints" that such a bottoming was occurring.
- Previously: Joy Global PT lowered at BMO Capital (Dec. 30 2015)
Fri, Mar. 4, 5:58 PM
- Joy Global (NYSE:JOY) still should be viewed cautiously by investors despite yesterday's 20% gain following Q4 earnings and guidance, Citigroup says, seeing the gains driven largely by short-covering and still rating the shares at Neutral; the stock rose another 9.8% today.
- Should “risk-on” sentiment persist, Citi says its Buy-rated names offer better risk-adjusted upside, especially as demand for JOY’s largest end market - thermal coal - is in a global structural decline.
- JOY management tightened its EPS guidance range, but includes the benefit tied to an additional $15M of restructuring actions, prompted by a sharper decline in U.S. coal markets; Citi questions whether such “one-time” restructuring costs ought to be considered ongoing, as JOY suggested that more actions are likely to come.
Thu, Mar. 3, 5:33 PM
- Joy Global (NYSE:JOY) surged 20% in today's trade after reporting a larger than expected Q4 loss but offering guidance that was relatively in line with Wall Street expectations, giving hope to investors who had feared much worse.
- Despite the difficult start to the year, Joy expects earnings and revenue to come in near the mid-point of guidance, with most of the earnings coming in H2.
- "Even though the [Q4] numbers were on the weaker side, they maintained their guidance through the year," Jefferies analyst Stephen Volkmann says, adding that a short squeeze exacerbated today's rise.
- Joy also realized $100M in Q4 free cash flow despite the earnings loss and Q1 typically being a seasonally weaker cash quarter, Citi's Timothy Thein notes.
- CEO Ted Doheny said in today's earnings conference call that Joy is raising its cost-savings goal for the year to $100M from $85M, and expects capital spending of $60M-$70M, down from $71M in 2015; Joy also is using only ~25% of its production capacity and plans to sell more of its plants and machinery.
- Caterpillar (NYSE:CAT), which also has been cutting costs aggressively due to slower growth in markets such as China and Brazil, followed JOY to a 3.4% gain.
- Earlier: Joy shares reverse higher
Thu, Mar. 3, 10:10 AM
- Joy Global (JOY +15.8%) is soaring in early trade, after sitting in the red during most of premarket action.
- FQ1 results missed expectations, dividend was in line and no share repurchases were announced, guidance fell slightly short of estimates...What happened?
- Previously: Joy Global sinks after missing expectations (Mar. 03 2016)
Thu, Mar. 3, 7:41 AM
- Adjusted net loss of $22.4M, or -$0.23 per diluted share vs. net income $29.2M, or $0.29 per diluted share in the same quarter a year ago.
- Consolidated bookings fell 21% Y/Y to $550M. Service bookings dropped 18% to $432M.
- Backlog at the end of the quarter was $897M vs. $873M at the beginning of the year.
- Capital expenditures were $8M, compared to $22 million in the prior year first quarter.
- During the quarter, the company again did not repurchase any shares of its common stock.
- "Taking into account current weaker market conditions, we now expect sales...to be towards the middle of our previous guidance range of $2.4B-$2.6B and $0.10-$0.50 for adjusted earnings per fully diluted share," CEO Ted Doheny said. "With regard to phasing across the fiscal year, we expect all of our adjusted earnings will come in the second half of the fiscal year."
- FQ1 results
- JOY -2.4% premarket
Thu, Mar. 3, 6:37 AM
Joy Global, Inc. manufactures and distributes mining equipment for the extraction of coal and other minerals and ores. Its equipment are used in major mining regions throughout the world to mine coal, copper, iron ore, oil sands and other minerals. It has two business segments: Underground... More
Sector: Industrial Goods
Industry: Farm & Construction Machinery
Country: United States
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