Manitowoc (MTW)

Crane and lifting equipment company Manitowoc (NYSE:MTW) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 4.9% year on year to $470.9 million. Its non-GAAP loss of $0.16 per share was 71% below analysts’ consensus estimates.

Company Overview

Contracted by the United States Navy during WWII, Manitowoc (NYSE:MTW) provides cranes and lifting equipment.

Automation that increases efficiencies and connected equipment that collects analyzable data have been trending, creating new sales opportunities for construction machinery companies. On the other hand, construction machinery companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the commercial and residential construction that drives demand for these companies’ offerings.

Competitors offering similar products include Terex (NYSE:TEX), Caterpillar (NYSE:CAT), and Hyster-Yale (NYSE:HY).

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 many enduring ones grow for years. Unfortunately, Manitowoc’s 4.3% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the industrials sector 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. Manitowoc’s recent performance shows its demand has slowed as its annualized revenue growth of 1.7% over the last two years was below its five-year trend.

Manitowoc also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Manitowoc’s backlog reached $797.8 million in the latest quarter and averaged 12.4% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, Manitowoc missed Wall Street’s estimates and reported a rather uninspiring 4.9% year-on-year revenue decline, generating $470.9 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Manitowoc has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 18% gross margin over the last five years. That means Manitowoc paid its suppliers a lot of money ($81.99 for every $100 in revenue) to run its business.

This quarter, Manitowoc’s gross profit margin was 19.1%, in line with the same quarter last year. Zooming out, Manitowoc’s full-year margin has been trending down over the past 12 months, decreasing by 1.3 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Manitowoc was profitable over the last five years but held back by its large cost base. Its average operating margin of 1.5% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Manitowoc’s operating margin might fluctuated slightly but has generally stayed the same 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.

In Q1, Manitowoc generated an operating profit margin of 1.1%, down 1.9 percentage points year on year. Since Manitowoc’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.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Manitowoc, its EPS declined by 42.1% annually over the last five years while its revenue grew by 4.3%. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

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.

Manitowoc’s two-year annual EPS declines of 73.3% were bad and lower than its 1.7% two-year revenue growth.

In Q1, Manitowoc reported EPS at negative $0.16, down from $0.14 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Manitowoc’s full-year EPS of $0.11 to grow 594%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Manitowoc broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.

Taking a step back, we can see that Manitowoc’s margin dropped by 1.5 percentage points during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. Almost any movement in the wrong direction is undesirable because of its already low cash conversion. If the longer-term trend returns, it could signal it’s in the middle of an investment cycle.

Manitowoc broke even from a free cash flow perspective in Q1. This result was good as its margin was 9.1 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on 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? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Manitowoc historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 1.5%, lower than the typical cost of capital (how much it costs to raise money) for industrials companies.

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. Over the last few years, Manitowoc’s ROIC averaged 1.6 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

Manitowoc reported $41.4 million of cash and $453.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $118.8 million of EBITDA over the last 12 months, we view Manitowoc’s 3.5× net-debt-to-EBITDA ratio as safe. We also see its $21.5 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Manitowoc blew past analysts’ backlog expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue missed significantly and its EPS fell short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The areas below expectations seem to be driving the move, and the stock traded down 3.5% to $8.01 immediately following the results.

Updated: May 22, 2025 at 11:07 PM EDT

Before making an investment decision, investors should account for Manitowoc’s business fundamentals and valuation in addition to what happened in the latest quarter.

We see the value of companies helping their customers, but in the case of Manitowoc, we’re out. To begin with, its revenue growth was uninspiring over the last five years, and analysts don’t see anything changing over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its relatively low ROIC suggests management has struggled to find compelling investment opportunities. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Manitowoc’s P/E ratio based on the next 12 months is 14.1x. 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 $11.05 on the company (compared to the current share price of $11.07).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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