For a lot of the first decade of the 2000s, Actuant (NYSE:ATU) was a Wall Street darling; the shares rose almost 400% for the decade (and more than 800% if you stop the clock at the end of May 2008), and trounced other industrial conglomerates like Dover (NYSE:DOV), Parker-Hannifin (NYSE:PH), Crane (NYSE:CR), and even the much-loved Danaher (NYSE:DHR). Since then, the script has flipped, with Actuant's less-than-50% return beaten pretty soundly by all of those comps (including much-maligned Dover).
Actuant hit a hard wall when the recession hit in fiscal 2009, and results have been choppy ever since. With the downturn in the energy sector hitting the company pretty hard, the last few years have been tough ones and Actuant now has a new CEO and a new CFO, and four of the major architects of the old Actuant are no longer with the company in any meaningful capacity.
What happens now is the real question. The company's Industrial segment is anchored by the excellent Enerpac business, and the energy segment's Hydratight is likewise a very good business. It wouldn't surprise me if the company looked to divest several other businesses, though, and a break-up of the company could offer something of a floor to valuation as Enerpac and Hydratight would likely find many willing buyers. While Actuant looks reasonably valued today, a stronger-than-expected recovery in resource-driven end markets like energy, mining, agriculture and off-highway equipment and/or better progress with margin improvement could offer some upside.
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Can A New Team Restore Actuant's Shine?