Wednesday, May 10, 2017

Milacron Waiting For Its Recovery To Take Hold

Although Milacron (NYSE:MCRN) shares have outperformed the S&P 500 since my last piece on the company, the reality is that a great many industrial stocks have been strong since late October and Milacron's relative performance isn't so impressive. While this is admittedly a hodgepodge, if you consider a group of peers that "sell stuff that companies use to make stuff," Milacron doesn't stack so well against the likes of Kennametal (NYSE:KMT), Nordson (NASDAQ:NDSN) and Illinois Tool Works (NYSE:ITW).

Then again, compared to a more limited sampling of companies in the machine tool space - companies like Hardinge (NASDAQ:HDNG), Hurco (NASDAQ:HURC), and DMG Mori - then the performance looks a little better again. Simply put, it's still not easy out there for machine tool companies, as order growth has remained in the low single digits in developed markets.

I'm still fairly bullish on Milacron, as I believe underinvestment in capex will start to reverse and that the company will benefit from increasing adoption of automated solutions. Add in some expense-side self-help to my underlying low-to-mid single-digit revenue growth expectation and Milacron should be able to produce free cash flow growth in the high single digits to low double-digits. That, in turn, would seem to support an expected annual return around 10%, making Milacron a name that is still worth considering.

Read the full article here:
Milacron Waiting For Its Recovery To Take Hold

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