reports
- Denise Molina
Atlas Copco's mining spin-off focuses the company on its core competen...
Atlas Copco's results were broadly in line with our expectations on a reported basis, but with stronger underlying growth. Margins remained stable. The company is planning to spin off the mining and civil engineering divisions in June, and the remaining core of the business increased revenue organically by 7%-15%, with orders outpacing revenue, leading to a book/bill ratio above 1 time, positive for growth in the next quarter. We expect to revise our forecasts and our SEK 272 fair value estimate...
- Denise Molina
Altas Copco 1Q In Line With Our Expectations
Atlas Copco's results were broadly in line with our expectations on a reported basis, but with stronger underlying growth. Margins remained stable. The company is planning to spin off the mining and civil engineering divisions in June, and the remaining core of the business increased revenue organically by 7%-15%, with orders outpacing revenue, leading to a book/bill ratio above 1 time, positive for growth in the next quarter. We expect to revise our forecasts and our SEK 272 fair value estimate...
- Denise Molina
Atlas Copco's Operating Leverage and Vacuum Pumps Continue to Yield Go...
High operating leverage helped narrow-moat Atlas Copco's third-quarter results surprise on the upside on margins. Around 9% year-to-date volume growth across its portfolio of mining, tooling, and excavation equipment has expanded the company's nine-month EBIT margin by 180 basis points year over year. Nine-month sales growth matched the volume increase, as the company has not increased prices across most of its divisions since 2015. We expect to make changes to our model with an impact of no mor...
- Denise Molina
Atlas Copco Announces New Management Team for Spin-Off
Atlas Copco recently announced the appointment of Per Lindberg to lead its spin-off company, Epiroc, which will include the infrastructure and mining businesses. We believe Lindberg's record reflects solid performance in improving underlying operations but is less impressive in delivering acquisition-related synergies. We retain our narrow moat rating but are increasing our fair value estimate to SEK 250 from SEK 230 for the local shares and to $31 from $26 for the ADRs, adjusting for a series o...
- Denise Molina
Atlas Copco's mining spin-off focuses the company on its core competen...
Atlas Copco's first-quarter 2017 results were largely helped by easy year-over-year comparables. First-quarter revenue grew by 11% versus the year-ago quarter, which saw a 2% decline. Volumes, not price, drove revenue growth, and so the EBIT margin remained stable at 20%. While we welcome the rebound in volumes, there are no signs yet of increasing pricing power or cost improvements to change our long-term outlook on the company. We are maintaining our narrow moat rating and our fair value estim...
- Denise Molina
Atlas Copco First-Quarter Results Flattered by Easy Year-Over-Year Com...
Atlas Copco's first-quarter 2017 results were largely helped by easy year-over-year comparables. First-quarter revenue grew by 11% versus the year-ago quarter, which saw a 2% decline. Volumes, not price, drove revenue growth, and so the EBIT margin remained stable at 20%. While we welcome the rebound in volumes, there are no signs yet of increasing pricing power or cost improvements to change our long-term outlook on the company. We are maintaining our narrow moat rating and our fair value estim...
- Denise Molina
Atlas Copco's mining spin-off focuses the company on its core competen...
Atlas Copco reported fiscal 2017 results that were slightly below consensus expectations; however, the focus going forward will be on the 2018 spin-off of the mining/civil engineering business and valuation of the remaining, and more interesting, vacuum and compressor businesses. The company has not yet released full financials for the two businesses, and so we cannot make a full assessment at this point. However, volumes in these two businesses were up 3% for the fourth quarter of 2016, and wit...
- Denise Molina
Atlas Copco's mining spin-off focuses the company on its core competen...
Atlas Copco reported fiscal 2017 results that were slightly below consensus expectations; however, the focus going forward will be on the 2018 spin-off of the mining/civil engineering business and valuation of the remaining, and more interesting, vacuum and compressor businesses. The company has not yet released full financials for the two businesses, and so we cannot make a full assessment at this point. However, volumes in these two businesses were up 3% for the fourth quarter of 2016, and wit...
- Denise Molina
Atlas Copco Ends 2016 on Strong Footing
Atlas Copco reported fiscal 2017 results that were slightly below consensus expectations; however, the focus going forward will be on the 2018 spin-off of the mining/civil engineering business and valuation of the remaining, and more interesting, vacuum and compressor businesses. The company has not yet released full financials for the two businesses, and so we cannot make a full assessment at this point. However, volumes in these two businesses were up 3% for the fourth quarter of 2016, and wit...
- Denise Molina
We Welcome the Atlas Copco Spin-Off
We welcome the Atlas Copco board's decision to focus the company by spinning off the mining and civil engineering divisions. Under the current structure, management’s plate is full with the ongoing integration of the vacuum business, on the one hand, and managing the negative effects from the cyclical headwinds in mining and construction, on the other. In our view, the vacuum business has greater longer-term promise and overlap with the company’s core, and moaty, compressor business than the...
- Denise Molina
Atlas Copco Has Solid Third Quarter, Shares Look Overvalued; Swept Up ...
Atlas Copco's third-quarter results indicate that the company is on track to meet our full-year expectations, the company continues to use its innovation to create pricing power and that while still mixed, mining related equipment weakness has troughed. Reflecting this improvement, we have increased our fair value estimate to SEK 212 per share for the local shares and USD 24 per share for the ADR, from SEK 191 and SEK 22 per share, respectively. Even with this increase the shares look signif...
- Denise Molina
We are initiating coverage on Atlas Copco with a narrow moat rating; t...
We think Atlas Copco's shares are currently overvalued, with volume weakness in construction and mining equipment stunting chances for revenue growth. We are likely to lower our forecasts to reflect a disappointing first half of 2016, with volume in mining and construction down 6%-7% year over year. Group revenue was down 4% in the first half, and the company is unlikely to meet our full-year forecast for flat revenue year over year. However, we don't anticipate reducing our fair value estimate....
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