Hyster-Yale Materials Handling, Inc. – Value Analysis (NYSE:HY) : September 14, 2017

Capitalcube gives Hyster-Yale Materials Handling, Inc. a score of 69.

Our analysis is based on comparing Hyster-Yale Materials Handling, Inc. with the following peers – Terex Corporation, Wabash National Corporation, Cummins Inc., Manitex International, Inc. and Power Solutions International, Inc. (TEX-US, WNC-US, CMI-US, MNTX-US and PSIX-US).

Investment Outlook

Hyster-Yale Materials Handling, Inc. has a fundamental score of 69 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Taking peer performance into consideration, relative performance over the last month and last year is around the peer median.
  • It trades at a lower Price/Book multiple (1.68) than its peer median (2.23).
  • The market expects HY-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • HY-US‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • Over the last five years, HY-US‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While HY-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • HY-US has additional debt capacity.

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Leverage & Liquidity

HY-US has additional debt capacity.

  • With debt at a reasonable 24.55% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 25.30%), and a well-cushioned interest coverage level of 7.65x, HY-US has the capacity to borrow some more.
  • All 5 peers for the company have an outstanding debt balance.

HY-US has moved to a relatively high liquidity from an Quick & Able profile at the recent year-end.

  • HY-US‘s interest coverage has increased 0.61 points from last year’s low but is still below its five-year average interest coverage of 19.23.
  • While its interest coverage increased to 7.65x from 7.04x (in 2016), its peer median decreased during this period to 4.06x from 4.71x.
  • Interest coverage rose 1.25 points relative to peers.
  • HY-US‘s debt-EV is its highest relative to the last five years and compares to a low of 2.84% in 2014.
  • Like the interest coverage trend, while its debt-EV also increased (to 24.55% from 17.31%), its peer median decreased during this period (to 25.30% from 29.13%).
  • Relative to peers, debt-EV rose 11.06 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

Access the detailed analysis for Hyster-Yale Materials Handling, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Terex Corporation 26.05 2.35 0.47 26.57
Wabash National Corporation 17.24 2.12 12.17 64.62
Cummins Inc. 6.45 1.76 19.9 111.76
Manitex International, Inc. 52.18 1.38 -0.47 -17.22
Power Solutions International, Inc. 47.8 3.19 -0.58 7.87
Hyster-Yale Materials Handling, Inc. Class A 24.55 1.67 7.65 43.88
Peer Median 25.3 1.94 4.06 35.22
Best In Class 6.45 3.19 19.9 111.76

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Company Profile

Hyster-Yale Materials Handling, Inc. designs, engineers, manufactures, sells and services a comprehensive line of lift trucks. It markets under Hyster and Yale brand names. The company operates through four segments: Americas, EMEA, JAPIC and Nuvera. Hyster-Yale Materials Handling was founded in 1999 and is headquartered in Cleveland, OH.

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