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Altra Industrial (AIMC) Down 21.5% YTD: What's Hurting It?

Shares of Altra Industrial Motion Corp. AIMC have lost 21.5% compared with the industry’s decline of 20.7% year to date. The decrease in share price primarily reflects the adverse impacts of the coronavirus pandemic on the company’s operational performance.


The company currently carries a Zacks Rank #4 (Sell).

Factors Affecting the Company

The coronavirus outbreak has been impacting Altra Industrial’s operations. For instance, the company’s revenues in first-quarter 2020 decreased 10.1% year over year.  The decline was primarily attributable to softness in its transportation, distribution, mining, agriculture, turf & garden, medical equipment, and oil & gas markets, owing to the coronavirus-led market downturn. The company believes that difficult end-market conditions in the wake of the coronavirus outbreak will continue to affect its performance in 2020.

Also, despite its healthy liquidity position and efforts to deleverage the balance sheet, its huge debt level is concerning. Exiting first-quarter 2020, its long-term debt was at $1,658.5 million, reflecting a sequential increase of 6.1%. Also, its total debt to total capital was 49.4% at the first-quarter end, up from 45.7% at the end of the fourth quarter of 2019.

Moreover, given its international presence, the company faces unfavorable foreign currency movements, impacting bottom-line growth. For instance, in first-quarter 2020, forex woes had an adverse 1.45% impact on its revenues.

In addition, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.84 for 2020 and $2.49 for 2021, marking declines of 28.1% and 18.4% from the respective 60-day-ago figures. Notably, there have been two downward revisions in estimates for 2020 and one downward revision for 2021 against no upward revision for both years in the past 60 days.

Stocks to Consider

Some better-ranked stocks are Activision Blizzard, Inc. ATVI, Broadwind Energy, Inc. BWEN and Graphic Packaging Holding Company GPK. While Activision Blizzard currently sports a Zacks Rank #1 (Strong Buy), Broadwind Energy and Graphic Packaging carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard delivered a positive earnings surprise of 31.34%, on average, in the trailing four quarters.

Broadwind Energy delivered a positive earnings surprise of 50.00%, on average, in the trailing four quarters.

Graphic Packaging delivered a positive earnings surprise of 9.59%, on average, in the trailing four quarters.

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