With the stock markets in the middle of a "high oil prices will kill growth" snit, once-hot commodity plays have cooled off rapidly. That's not the best time, then, for mining pure-play Joy Global (Nasdaq:JOYG) to offer up a mixed quarter. While the global mining boom almost certainly still has legs, it looks like this entire sector has lost some momentum for the time being.
A Mixed First Quarter
Joy Global's fiscal first quarter gives investors a lot to chew on and try to interpret. Revenue was up 19% from the year-ago quarter, but down 17% sequentially and off a bit from the average analyst guess. Underground machinery and original equipment both appeared to be weaker than analysts hoped, though they were up 21% and 12% respectively (and investors should note that there is overlap in these two categories). (For more, see Joy Global A Mix Of Performance And Scarcity.)
Profitability was also disappointing on a relative basis. Gross margin was up more than a point and a half, and operating income jumped 31%, but expectations were generally higher. So while it is certainly true that operating margins in the high teens for both underground and surface equipment are not bad in their own right, the reality is that stocks trade largely on expectations and Joy Global did not meet them this time around.
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