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Joy Global’s Ride Is Far from Over
12/16/2010 2:10 pm EST
Reporting fiscal fourth-quarter earnings December 15 before the market opened in New York, Joy Global (Nasdaq: JOYG) beat analyst earnings expectations by 23 cents a share with quarterly earnings of $1.39. Revenue of $1.05 billion, up 9% from the fourth quarter of fiscal 2009, beat projections of $920 million.
Moving to the world of “That’s nice, but what have you done for me lately?” the mining-equipment maker raised guidance for the fiscal 2011 year that ends in October 2011 to earnings per share of $5 to $5.30 from the previous guidance of $4.10 to $4.15 a share. (The Wall Street consensus was at $4.79 before today’s report.) Joy Global raised its guidance for fiscal 2011 revenue to $3.9 billion to $4.1 billion from its previous projection of $3.86 billion.
Frankly, that guidance still sounds conservative to me. Bookings in the fourth quarter grew by 48%, and the order backlog climbed to $1.8 billion from $1.5 billion as of October 30, 2009.
The global mining industry is raising capital-spending budgets for 2011 and beyond as fast as it can to fill an anticipated gap between supply and demand. A survey of global mining executives by the Financial Times puts mining capital spending at $115 billion to $120 billion in 2011. That would be a new record, surpassing the peak of $110 billion set in 2010.
The stock climbed 8% on December 15 on the news to a high of $86.95 during the day before pulling back a bit. That high put the price at 16.4 to 17.3 times the company’s guidance for fiscal 2011. That’s not expensive, considering the company’s guidance works out to earnings growth of 13.7% to 20.5% in fiscal 2011. And, of course, shares are even less expensive if you think, as I do, that the company’s guidance is low.
Think I’m going to keep these shares in my Jubak Picks 50 long-term portfolio when I do my annual drops and adds to that group of stocks in early January? You bet.
And if I can get a decent entry price on these shares, I might even add them to my Jubak’s Picks 12-18 month portfolio; $80 a share would be a good entry point.
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund (JUBAX), may or may not now own positions in any stock mentioned in this post. The fund did own shares of Joy Global as of the end of November. For a full list of the stocks in the fund as of the end of November, see the fund’s portfolio here.
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