Institutional Ownership Is Strong At Enerpac Tool Group
Insider activity in shares of Enerpac Tool Group (NYSE: EPAC) has been sparse over the past 12 months but is no less important to price action today. While there has been only one insider trade in the last 12 months that trade was a purchase and one that appears to have put a bottom in the stock. The purchase was made by director E. James Furland, jr. and marks the second purchase by him in the last 12 to 15 months. His total holdings amount to about 44,000 shares or roughly 0.0725% of the company which is not much but there is another factor to consider as well. While insiders hold a mere 0.41% of the company the institutions own the rest.
Institutional activity in Enerpac Tool Group picked up this year after virtually no activity in the prior year. The key takeaway is that net activity is bullish by a margin of nearly 2 to 1 bringing the institutional ownership up to over 99.0%. This means shares are being tightly held and subject to large price swings if and when the broader market becomes interested.
Enerpac Results Marred By Headwinds
Enerpac Tool Group reported an OK quarter in which revenue grew YOY on global reopening efforts but there are concerns to be had. The company’s $130.9 million in consolidated revenue is up 9.6% over last year but missed the consensus estimate by 730 basis points and failed to reclaim the pre-COVID levels. Revenue was driven by a 16% increase in product sales that was offset by a 3% decline in service revenue. The company says business was impacted by supply chain and inflationary headwinds but declined to estimate how badly revenue was affected.
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Moving down the report, margins were also impacted by supply chain and inflationary headwinds but revenue strength and leverage related to the reopening were enough to offset it for now. The adjusted operating margin came in at 16.2% versus last year’s 15.5% and is expected to remain strong through the end of the year. The bad news is that, on the bottom line, both the GAAP and adjusted earnings came in below the consensus. The GAAP earnings of $0.05 missed consensus by $0.15 but there are mitigating factors that include restructuring charges and the cost of board selection. On an adjusted basis, earnings came in at a much better $0.16 but still a nickel shy of expectations. The mitigating factor here is that adjusted earnings grew on both a YOY and two-year basis.
The Analysts Are Holding Enerpac
Enerpac has a surprisingly low number of analyst ratings for a stock with as high an institutional ownership that it has. The three current ratings amount to a strong Hold, however, and imply at least 20% of upside for the stock. The latest chatter comes from RBC, though which lowered its price target to the market low of $20 compared to the consensus of $24.25. The high price target of $32 is held by CJS Securities and was set in March of 2021. That target assumes more than 50% of upside for the stock but we don’t think that is going to happen.
The Technical Outlook: Enerpac Is Bottoming
Enerpac is bottoming in the range of $18 to $20. This move is not only closing an Open Window that formed late in 2020 but is also confirming support at the level where Director Furland bought his shares. Assuming this level of support holds, we see a Double-Bottom forming that could take price action up to the $23 to $23.50 level if not higher. Longer-term, there is a chance for Enerpac to move up to retest post-COVID highs near $28 but we don’t see that resistance failing unless the fundamental picture (read headwinds subside) improves.
Companies in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Enerpac Tool Group (EPAC)||$19.08||-3.6%||0.21%||31.80||Hold||$23.40|