Can A New Team Restore Actuant's Shine?

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?

Seeking Alpha: Actuant Could Use A Boost To Growth

As conglomerates go, Actuant (ATU) is more diverse than most and while it is often one of the largest/leading companies in the sectors in which it competes, it can be challenging to corroborate the company's performance with its peer group. Be that as it may, performance has been a little iffy lately relative to sell-side expectations and the stock has been stuck in a relatively narrow band for the past year.

Actuant isn't lacking in ambition, as management intends to use organic/internal development and M&A to push toward a doubling of the business in five years. That may well be attainable, but the company's poor history of ROIC generation lends itself to questions like "growth at what cost?" I do believe that Actuant is undervalued today, and I like its hydraulic tools and bolt tightening businesses, but I'd want to see a better path for margins and returns on capital before thinking of it as a potential core holding.

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Actuant Could Use A Boost To Growth

Investopedia: Actuant Still Working Through A Lull

That big second-half rebound in industrial demand is starting to look weaker and weaker. Although companies like Grainger (NYSE:GWW) and Fastenal (Nasdaq:FAST) have been reporting decent demand for industrial supplies and equipment among manufacturing customers, Actuant's (NYSE:ATU) guidance suggests that most industrial, energy, and vehicle markets are still crawling along. While I do believe growth should pick up again, the value proposition here doesn't look very compelling.

Sluggish Results Due To Sluggish Demand
Actuant's results aren't showing much underlying strength in key end-markets like industrial, energy, or vehicles. Overall revenue was flat on a reported basis and down 2% on a “core” or organic comparison. Industrial revenue rose 1% as reported, and energy rose 3%, but sales in the engineered products business were down about 2%.

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Investopedia: Actuant Down To One Horse

Actuant (NYSE:ATU) is a tricky company to evaluate, given a pretty heterogeneous mix of markets and products. Nevertheless, it's following a pretty typical pattern for industrial stocks - slowdowns in Europe and China are pressuring growth and the company is increasingly dependent upon energy to drive near-term results. While Actuant will do alright if global industrial growth picks up as expected later this year, management's own guidance suggests that might not be as likely as the Street has been hoping.

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http://stocks.investopedia.com/stock-analysis/2012/Actuant-Down-To-One-Horse-ATU-GWW-ETN-GE0625.aspx.

Investopedia: ABB In Decent Shape No Matter What In 2012

The broadly-defined industrial sector has weakened going into 2012, due at least in part to increasingly challenging comps and negative view of the global economy in the year ahead. Although ABB (NYSE:ABB) does not often get its due credit for the quality of its operations, and there are some legitimate areas of potential concern, this stock looks just too cheap heading into an uncertain 2012.


Low Growth but Improving Orders
Recent performance at ABB has not been so hot, with just 4% organic growth. Power hasn't been bad and ABB has held its own with Siemens (NYSE:SI), Alstom and Schneider. Automation, especially process automation, has been a bit more problematic. Given that companies like Siemens, Honeywell



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Investopedia: A Better 2012 Would Be Great For Actuant

Wall Street has already made its early bets on the state of the economy in 2012, and the outlook is not very encouraging. That would be bad news for investors in a diversified industrial mini-conglomerate like Actuant (NYSE:ATU) if not for the fact that Wall Street is often wrong. Although Actuant has recovered nicely from the worst of the recession and does have increasingly challenging comparables ahead, any upside in 2012's economic performance could make this an undervalued industrial play.

A Good Start to the Fiscal Year
Perhaps this quarter will set the tone for a better-than-expected fiscal year and an undervalued stock getting some love. Actuant reported 23% revenue growth and topped the highest analyst estimate, though core revenue growth was a far more modest 7%. Growth was strong in both the industrial and energy categories, where revenue rose by a low-teens percentage organically. Electrical growth was more modest at 7%, while core growth in the engineered segment was flat.


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Investopedia: Illinois Tool Works Spooks The Street

Whether it's the wrangling over the debt limit in Washington, the ongoing problems in Europe, or the shaky economic data coming out in recent months, institutional investors are playing defense these days. So while it looks like the biggest problem Illinois Tool Works (NYSE:ITW) has is that its early-cycle businesses are slowing and the company is transitioning through the cycle, investors seem to be pretty nervous about the stock, the company, and the broader industrial sector. 

Iffy Second Quarter Results  
To be sure, there were some spots on the second quarter for Illinois Tool Works. Reported revenue rose more than 17%, but organic growth was more on the order of 6%. That is really not so bad relative to other large industrial conglomerates like United Technologies (NYSE:UTX), General Electric (NYSE:GE) or Danaher (NYSE:DHR), but it does represent a significant deceleration from the first quarter, and it was not great relative to expectations. 


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