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Reasons Why it is Worth Investing in Enerpac Tool (EPAC) Now

Investors interested in seeking exposure in the manufacturing tools space might find Enerpac Tool Group Corp EPAC to be an attractive option. Healthy financial performance and growth prospects as well as solid fundamentals raise the stock’s attractiveness.

The company, with a market capitalization of $1.6 billion, engages in making and distributing industrial tools — including controlled force products and high-pressure hydraulic tools — and providing related services. It presently has a Zacks Rank #2 (Buy).

The company belongs to the Zacks Manufacturing - Tools & Related Products industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 33% (with the rank of 83) of more than 250 Zacks industries.

In the past three months, the company’s shares have gained 4.8% compared with the industry’s growth of 2.5%. Notably, the S&P 500 expanded 5.7%, while the sector advanced 0.8% in the same timeframe.


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Below we discussed why Enerpac Tool is a worthy investment option.

Earnings Performance and Projections: The company’s results for third-quarter fiscal 2021 (ended May 31, 2021) were impressive, with earnings surpassing the Zacks Consensus Estimate by 64.7%. Also, sales exceeded estimates by 4.5%. On a year-over-year basis, the company’s earnings of 28 cents reflected an improvement from the year-ago quarter’s loss of 6 cents.

In the quarters ahead, the company is poised to benefit from its solid product offerings, focus on product innovation, digital marketing, e-commerce programs and strengthening vertical markets. Recoveries in global markets after an ease in the pandemic-related restrictions are anticipated to aid. Gains from buyouts too are tailwinds.

Enerpac Tool anticipates sales of $290-$295 million for the second half of fiscal 2021 (ending August 2021), up from the previously mentioned $280-$290 million.

Diversified Operations: The company operates in various markets, including mining, industrial, oil & gas, and product automation. Also, it has exposure in more than 100 countries worldwide. The major chunk of its revenues is generated from the United States, Asia, Europe and the Middle East. Benefits in some markets/countries help offset the weakness in one or more markets/countries.

Also, the company’s solid product offerings are benefiting over time. It introduced 9 product families in the first three quarters of fiscal 2021 (ended May 31, 2021), while 22 product families were added to its portfolio in fiscal 2020 (ended August 2020). In third-quarter fiscal 2021, new product contributed 12% to sales.

Shareholders’ Rewards: Enerpac believes in rewarding shareholders with dividend payouts. In the first nine months of fiscal 2021, the company paid out $2.4 million as dividends to its shareholders.

It refrained from repurchasing shares in the first nine months of fiscal 2021 but bought back shares worth $27.5 million in the year-ago comparable period. It has authorization left to buy back 5.2 million shares at the end of May 2021.

Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at 24 cents for the fourth quarter of fiscal 2021 (ending August 2021), reflecting an increase of 20% from the 30-day-ago figure.

Also, earnings estimates are pegged at 66 cents for fiscal 2021 (ending August 2021) and 93 cents for fiscal 2022 (ending August 2022), suggesting increases of 24.5% and 10.7% from the 30-day-ago figures, respectively.

Other Key Picks

Some other top-ranked stocks in the sector are Nordson Corporation NDSN, Lincoln Electric Holdings, Inc. LECO and Applied Industrial Technologies, Inc. AIT. While Nordson presently sports a Zacks Rank #1 (Strong Buy), both Lincoln Electric and Applied Industrial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for the companies have improved for the current year. Further, earnings surprise for the last reported quarter was 28.48% for Nordson, 16.10% for Lincoln Electric and 35.64% for Applied Industrial.

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