NEW YORK (TheStreet) -- Manitowoc (MTW) shares are surging in after-hours trading on Thursday, up 11.6% to $33.17, following reports that an activist investment firm wants to break up the company.
Relational Investors plans to announce that it has secured an 8.5% stake in the capital goods manufacturer, according to a report by The New York Times.
Relational wants to split the company's industrial equipment arm in two, according to the report.
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Separately, TheStreet Ratings team rates MANITOWOC CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MANITOWOC CO (MTW) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, MTW's share price has jumped by 53.05%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- MANITOWOC CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MANITOWOC CO increased its bottom line by earning $1.14 versus $0.77 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $1.14).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 5.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for MANITOWOC CO is currently lower than what is desirable, coming in at 28.41%. Regardless of MTW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.03% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, MANITOWOC CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: MTW Ratings Report