JOY.
”We can get into more details if those reading will add their 2 cents worth”
My 2 cents starts with who JOY is and the business sector that it operates in.
According to ADVFN ......
Joy Global is a manufacturer and servicer of mining equipment for the extraction of coal and other minerals and ores. The equipment is used in the mining regions globally to mine coal, copper, iron ore, oil sands, and other minerals.
So, logically speaking, it seems that JOY should benefit if there’s demand and activity in those areas. And, conversely, it may be impaired should those sectors experience fall back.
A local TA commentator recently had a look at the JSE (Johannesburg Stock Exchange) Industrial Metals Index and reported that since about 2011 it has been moving sideways, with a negative bias, and has been continuing to test a well established support level, with a recent break through on the downside.
In fact, when one looks at the Dow Jones Industrial Metals Index (DJUSIM), it portrays much the same characteristics, and has been bouncing off a long established support level of about 200 for the last 3 to 4 years.
Now South Africa is a reasonably large player in terms of the export of coal, iron-ore and several other strategic minerals. So if its Industrial Metals Index isn’t in any sort of positive uptrend (and nor is the DJUSIM), that could indicate that the global demand for these products and the industrial processes that go with them, is down, which, in turn, could indicate a lack of global industrial growth, which is not likely to benefit JOY.
I think that could support your own comment ....
” The global economy has not picked up yet.”
Having said that, I thought I’d now direct my 2c towards JOY itself, and more especially its financial performance.
First of all its last 5 Annuals ....
From what one sees there I’d say that the specifics show JOY to be a well run and profitable company.
Annual Revenues have increased nicely over the 5 years.
It has, IMO, a healthy EBITDA margin of around 22%
Its debt expense is low.
Its Pretax Return on Capital available to be Employed currently sits at a good 25%, and its latest Net Profit is at 13.5%.
And if we look its price chart JOY has shown a good uptrend from 2009 to mid 2011 which, I’d say, is in keeping with its fundamentals, ... which is always a good correlation, IMO.
However, from about mid 2011 to the present we see JOY’s price move sideways to down, and that is possibly reflected in its last 5 Quarterlies as well as in the slight decline in its last few Annual Pretax Returns on its Capital Employed.
A few years ago we saw Returns in the region of 30% to 35%. That’s now down to about 24% to 25%.
We are still seeing good ratios in the Quarterlies, indicating that the “quality” of JOY as a company remains. However, with the way things are in its market, the financials look a bit “static” without much in the way of growth.
So, in keeping with your own comments, TO, ...
”It is my belief that it is very slowly accelerating and that we'll see more improvements every year .....
....... and I believe they (the “Analysts”) are simply too pessimistic.”
... I would say (for what my 2c is worth) that one needs to wait for an improvement in the demand for Industrial Metals which should also have a spin-off in the demand for related equipment, etc..., which should then get JOY up and running again and provide a good return on one’s investment in that company, as was the case in years gone by. |
