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Here's How Enerpac Tool (EPAC) is Positioned to Curb Cost Woes
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Enerpac Tool Group Corp. (EPAC - Free Report) is likely to gain from its presence in diversified end markets that allows it to nullify risks associated with a single market. Also, strength in EPAC’s Industrial Tools & Services segment is likely to drive its performance in the quarters ahead.
For fiscal 2022 (ending August 2022), the segment’s core sales are predicted to increase in the low-teen percentage. EPAC’s incremental product sales, cost-reduction plans, footprint optimization and a focus on rental and value-added services are also likely to be beneficial in the coming quarters.
Enerpac Tool is poised to gain from its growth initiatives as well. EPAC launched ASCEND initiatives in March 2022, a transformation program to drive organic growth through focused market penetration and go-to-market strategies. The program is likely to improve its production efficiency, operational excellence, sales and channel coverage, apart from helping it control operating costs.
EPAC believes in rewarding its shareholders handsomely through share repurchases. Enerpac Tool announced a share repurchase program to buy back up to 10 million shares in March 2022. The share buyback program has no expiration date.
However, Enerpac Tool is witnessing the adverse impacts of escalating costs and operating expenses. EPAC’s cost of sales increased 16.2%, while selling, general and administrative expenses shot up 10.5% in second-quarter fiscal 2022 (ended February 2022) on a year-over-year basis. Inflationary pressures, supply-chain disturbances and negative impacts of logistics were a spoilsport in the quarter. These headwinds are expected to persist in the near term too.
EPAC operates across Asia, Europe and the United States. Enerpac Tool remains vulnerable to foreign-currency and geopolitical issues. Foreign exchange woes had an unfavorable impact of 2% on revenues in the fiscal second quarter. Its overseas business may take a hit from a stronger U.S. dollar in the quarters ahead.
Image Source: Zacks Investment Research
In the past three months, this currently Zacks Rank #3 (Hold) stock has dropped 10.2% compared with the industry’s decline of 26.7%.
Zacks Rank & Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. The stock has declined 11.7% in the past three months.
RBC Bearings Incorporated presently has a Zacks Rank #2 (Buy). ROLL delivered a trailing four-quarter earnings surprise of 3.4%, on average.
ROLL’s earnings estimates have increased 9.9% for fiscal 2023 (ending March 2022) in the past 60 days. Its shares have declined 10.5% in the past three months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, the stock’s earnings estimates have increased 4.7% for fiscal 2022 (ending July 2022). The same has lost 25.4% in the past three months.
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Here's How Enerpac Tool (EPAC) is Positioned to Curb Cost Woes
Enerpac Tool Group Corp. (EPAC - Free Report) is likely to gain from its presence in diversified end markets that allows it to nullify risks associated with a single market. Also, strength in EPAC’s Industrial Tools & Services segment is likely to drive its performance in the quarters ahead.
For fiscal 2022 (ending August 2022), the segment’s core sales are predicted to increase in the low-teen percentage. EPAC’s incremental product sales, cost-reduction plans, footprint optimization and a focus on rental and value-added services are also likely to be beneficial in the coming quarters.
Enerpac Tool is poised to gain from its growth initiatives as well. EPAC launched ASCEND initiatives in March 2022, a transformation program to drive organic growth through focused market penetration and go-to-market strategies. The program is likely to improve its production efficiency, operational excellence, sales and channel coverage, apart from helping it control operating costs.
EPAC believes in rewarding its shareholders handsomely through share repurchases. Enerpac Tool announced a share repurchase program to buy back up to 10 million shares in March 2022. The share buyback program has no expiration date.
However, Enerpac Tool is witnessing the adverse impacts of escalating costs and operating expenses. EPAC’s cost of sales increased 16.2%, while selling, general and administrative expenses shot up 10.5% in second-quarter fiscal 2022 (ended February 2022) on a year-over-year basis. Inflationary pressures, supply-chain disturbances and negative impacts of logistics were a spoilsport in the quarter. These headwinds are expected to persist in the near term too.
EPAC operates across Asia, Europe and the United States. Enerpac Tool remains vulnerable to foreign-currency and geopolitical issues. Foreign exchange woes had an unfavorable impact of 2% on revenues in the fiscal second quarter. Its overseas business may take a hit from a stronger U.S. dollar in the quarters ahead.
Image Source: Zacks Investment Research
In the past three months, this currently Zacks Rank #3 (Hold) stock has dropped 10.2% compared with the industry’s decline of 26.7%.
Zacks Rank & Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. The stock has declined 11.7% in the past three months.
RBC Bearings Incorporated presently has a Zacks Rank #2 (Buy). ROLL delivered a trailing four-quarter earnings surprise of 3.4%, on average.
ROLL’s earnings estimates have increased 9.9% for fiscal 2023 (ending March 2022) in the past 60 days. Its shares have declined 10.5% in the past three months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, the stock’s earnings estimates have increased 4.7% for fiscal 2022 (ending July 2022). The same has lost 25.4% in the past three months.