Short-Term Cyclical Pressures Overshadowing Columbus McKinnon's Long-Term Potential

This isn’t the easiest time to be bullish on industrial names, and particularly those companies like Columbus McKinnon (CMCO) that are more heavily skewed to cyclically weaker end-markets likes autos, oil/gas, metal processing, and heavy industry. Management has acknowledged those cyclical pressures with lower guidance, and the shares have fallen a bit since my last update in May.

I’m still bullish on the company’s longer-term potential. Management has made meaningful progress on its restructuring program, including cost reduction, productivity improvement, and portfolio realignment, and the lends credibility to a long-term EBITDA margin target around 20% (versus the mid-teens today). I also believe Columbus McKinnon is an underappreciated emerging play as a facilitator of increased automation in heavy manufacturing and material handling. I wouldn’t be surprised if there is another cut to guidance, and investors may want to hold off in anticipation of this, but with a fair value in the low-to-mid $40’s, I see value for longer-term holders.

Click here for more:
Short-Term Cyclical Pressures Overshadowing Columbus McKinnon's Long-Term Potential