John Bean (JBTM)

Food processing and aviation equipment manufacturer John Bean (NYSE:JBT) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 118% year on year to $854.1 million. Guidance for next quarter’s revenue was optimistic at $900 million at the midpoint, 2.8% above analysts’ estimates. Its non-GAAP profit of $0.97 per share was 15.8% above analysts’ consensus estimates.

Company Overview

Tracing back to its invention of the mechanical milk bottle filler in 1884, John Bean (NYSE:JBT) designs, manufactures, and sells equipment used for food processing and aviation.

Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand for general industrial machinery companies. Those who innovate and create digitized solutions can spur sales and speed up replacement cycles, but all general industrial machinery companies are still at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

Competitors offering similar products include Middleby (NASDAQ:MIDD), Illinois Tool Works (NYSE:ITW), and Colfax (NYSE:CFX).

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, John Bean’s sales grew at a sluggish 1.9% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. John Bean’s annualized revenue growth of 15.9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, John Bean reported magnificent year-on-year revenue growth of 118%, and its $854.1 million of revenue beat Wall Street’s estimates by 2.6%. Company management is currently guiding for a 124% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 67.1% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.

John Bean’s gross margin is good compared to other industrials businesses and signals it sells differentiated products, not commodities. As you can see below, it averaged an impressive 33.4% gross margin over the last five years. Said differently, John Bean paid its suppliers $66.60 for every $100 in revenue.

John Bean’s gross profit margin came in at 34.2% this quarter, marking a 1.5 percentage point decrease from 35.8% in the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

John Bean was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.4% was weak for an industrials business. This result is surprising given its high gross margin as a starting point.

Looking at the trend in its profitability, John Bean’s operating margin decreased by 6.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. John Bean’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q1, John Bean generated an operating profit margin of negative 3.9%, down 11.3 percentage points year on year. Since John Bean’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

John Bean’s flat EPS over the last five years was below its 1.9% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into John Bean’s earnings to better understand the drivers of its performance. As we mentioned earlier, John Bean’s operating margin declined by 6.7 percentage points over the last five years. Its share count also grew by 61.1%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For John Bean, its two-year annual EPS growth of 10.7% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q1, John Bean reported EPS at $0.97, up from $0.85 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects John Bean’s full-year EPS of $5.22 to grow 18.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

John Bean has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 9.2% over the last five years, better than the broader industrials sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that John Bean’s margin dropped by 6.8 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

John Bean’s free cash flow clocked in at $14.4 million in Q1, equivalent to a 1.7% margin. This result was good as its margin was 1.5 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

John Bean historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.6%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, John Bean’s ROIC averaged 4.1 percentage point decreases over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.

John Bean’s $1.99 billion of debt exceeds the $101 million of cash on its balance sheet. Furthermore, its 5× net-debt-to-EBITDA ratio (based on its EBITDA of $349.7 million over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. John Bean could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope John Bean can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

We were impressed by how significantly John Bean blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also glad its revenue and EPS guidance for next quarter exceeded Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 1.7% to $109 immediately following the results.

Updated: June 14, 2025 at 11:37 PM EDT

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in John Bean.

John Bean doesn’t pass our quality test. To begin with, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining operating margin shows the business has become less efficient. On top of that, its cash profitability fell over the last five years.

John Bean’s P/E ratio based on the next 12 months is 19x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $125.20 on the company (compared to the current share price of $117.89).