Joy Global, Inc. (JOYG: 51.45 -0.80 -1.53%) continues to find support from a long-term trend line after hitting a new multi-year high above $65 in mid April. With estimates on the rise and a compelling valuation, JOYG has some solid upward momentum.Description
Joy Global, Inc. develops, manufactures and designs mining equipment worldwide. The company was founded in 1884 and has a market cap of $5.35 billion.
In spite of the economic slowdown of 2008 and 2009, Joy Global’s business held up surprisingly well, showing sequential sales and earnings growth in each year. And now, with the economy once again showing signs of life, the company has been handily beating expectations, last on display in early June with better than expected Q2 results.
Second-Quarter Results
Revenue was down about 3% from last year to $896 million, but earnings came in well ahead of expectations at $1.15, 49% ahead of the Zacks Consensus Estimate. Joy Global’s average earnings surprise over the last four quarters now stands at an impressive 26%.
CEO Mike Sutherlin noted that the company saw gains in all its regions, but was encouraged by order rate improvement in North America on a stronger economy. Business out of China was a record as Joy Global attracts new customers and existing accounts grow.
The company also saw its back log grow from last year, up $200 million to $1.7 billion. Cash from operations more than doubled, coming in at $108 million on more effective inventory management.
Balance Sheet
Joy Global also emerged from the quarter with a stronger balance sheet, with its cash and equivalents up close to 200% to $583 million while its debt load fell $95 million to $535 million.
Estimates
Moving forward, Joy Global’s business is going to be impacted by the strength of the domestic economy and emerging markets like China and India, where strong demand for resources like copper and ore have stimulated demand for mining equipment.
On that note, the analyst’s remain bullish, with the current year up 88 cents in the last three months to $4.00. The next-year estimate is up 74 cents in the same time to $4.63, a solid 16% growth projection.
ValuationIn spite of recent gains, JOYG still offers compelling value, trading with a forward P/E of 12.5X, a nice discount to its peer’s 18.5X.
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