Joy Global Inc. (JOYG): First Take: 4Q2007 EPS in line, strong orders & outlook commentary - Goldman Sachs
News
Joy Global 4QFY07 EPS of $0.64 was in line with the $0.62 - $0.67 pre-announced range, with recurring EPS of $0.80 (excluding $0.16 of previously disclosed tax charges) below our $0.82 estimate. Surface mining equipment revenue and operating income was +7%/ +11% vs. our estimate while Underground was -4%/ -12%. Incremental margins were strong at 34%, improving from 3% incrementals in 3Q2007, which was impacted by supplier delivery issues in Surface and cost cutting efforts in Underground. 63% of sales were from aftermarket, in line with 3Q mix. 4QFY07 orders were strong up 16% yoy to $968 mn vs. our estimate of $800 mn, with a reported book to bill of 1.3X. Surface mining orders were up 35% yoy, with a book to bill of 1.6X driven by multiple shovel orders. Underground mining orders were down 3% yoy, with a book to bill of 1.1X, with US underground coal orders offsetting lumpiness in Int'l bookings. JOYG introduced FY2008 guidance of $3.10 $3.35 vs. our estimate of $3.45 and consensus of $3.29, with operating income guidance of $525 mn-$565 mn vs. our estimate of $574 mn and consensus of $550 mn.
Analysis
We expect strong bookings and outlook commentary to be enough to drive a modestly positive stock reaction, with the mid-point of FY2008 guidance essentially in line with consensus despite a higher tax rate assumption (34%, consensus = 32%). Our price target is under review.
Implications
JOYG's strong orders (+16% yoy with a book to bill of 1.3X) have a positive read-across for BUCY. |
