On Friday, Roth/MKM sustained their optimistic stance on Hyster-Yale Materials Handling (NYSE:HY), maintaining a Buy rating and a price target of $87.00. The firm's positive outlook follows a recent visit to the headquarters of Nuvera, a subsidiary of Hyster-Yale that focuses on fuel cell technology.
The analyst from Roth/MKM highlighted the company's undervaluation, noting that Hyster-Yale trades at less than 6 times forward EBITDA, which is considered low for a company with solid growth prospects. The assessment suggests that the market has not fully recognized Hyster-Yale's potential for growth above the gross domestic product (GDP) rate.
The endorsement of the stock comes with an expectation of continued multiple expansion. This is anticipated as a result of strategic investments in new modular platforms, which are projected to enhance the company's financial performance. Additionally, the progress in engagements at Nuvera is seen as a potential catalyst for the company's growth.
Roth/MKM's analysis indicates a belief in the intrinsic value of Hyster-Yale's operations, coupled with the potential upside from its fuel cell technology business. The firm anticipates that these factors will contribute to a positive reevaluation of the company's stock by the market.
The maintained price target of $87.00 reflects confidence in Hyster-Yale's trajectory and the expected benefits from its strategic initiatives and technology advancements. Roth/MKM's position suggests that investors may also see the value in Hyster-Yale's current valuation and future prospects.
In other recent news, Hyster-Yale Materials Handling, Inc. reported a record operating profit margin in the first quarter of 2024, with revenues exceeding $1 billion for the fourth consecutive quarter. The lift truck market saw a mixed performance, with global bookings declining year-over-year but increasing by 10% sequentially. The company's consolidated revenue reached $1.1 billion, with an operating profit of $84 million and earnings per share of $2.93.
The company anticipates a positive outlook for 2024, expecting an increase in full-year revenue, operating profit, and net income compared to the previous year. Despite a decline in global bookings for the lift truck market compared to the previous year, Hyster-Yale expects strong margin trends to continue, leading to higher full-year revenue and profit in the truck business.
Furthermore, the company received grants and tax credits to expand fuel cell production capacity. Bolzoni, a subsidiary of Hyster-Yale, is projected to maintain its 2023 revenue levels in 2024, focusing on higher margin products. Nuvera, another subsidiary, aims to boost sales through global customer product demonstrations and expects booked orders to drive 2024 sales.
InvestingPro Insights
The recent endorsement by Roth/MKM of Hyster-Yale Materials Handling (NYSE:HY) is further complemented by encouraging financial metrics and market performance. InvestingPro data reveals a robust market capitalization of $1.28 billion and an attractive P/E ratio of 8.49 for the last twelve months as of Q1 2024. These figures are indicative of a potentially undervalued company, as noted by the analyst.
Moreover, Hyster-Yale's revenue growth stands out, with a 12.24% increase over the last twelve months, pointing to the company's solid growth prospects. The company's dedication to shareholder returns is evident, with a dividend yield of 1.92% and a consistent history of raising dividends for 10 consecutive years, which is a testament to its financial stability and commitment to investors.
InvestingPro Tips highlight the company's strong return over the last three months, with a 25.79% total return, and a significant price uptick over the last six months, at 45.61%. Such performance metrics may appeal to growth-oriented investors. Additionally, with analysts predicting profitability this year and the company having been profitable over the last twelve months, Hyster-Yale's financial health appears robust.
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