Manitowoc Tumbles: Are Cranes a 2015 Story?

Manitowoc (MTW) has been the top-performing U.S. machinery stocks this year. Today, it’s one of the worst after a Jefferies downgrade today.

John Macdougall/Agence France-Presse/Getty Images Wrong kind of crane.

Shares of Manitowoc have gained 33% so far in 2014, easily besting Caterpillar’s (CAT) 6.6% rise, Deere’s (DE) 3.1% drop, Joy Global’s (JOY) 3.1% fall and Terex’s (TEX) 2.3% advance.

So why the Manitowoc downgrade? It comes down to valuation. Jefferies’ Stephen Volkmann and team explain:

Following the 37% increase in shares since the start of the year we believe that the valuation has become stretched. While [Manitowoc] is managing the downturn well, our channel checks and conversations with industry participants continue to support our belief that cranes will be a 2015 story. The shares of [Manitowoc] currently trade at an EV/Sales multiple of 137% and an EV/EBITDA multiple of 11.1x on our 2014 estimates, significant premiums to the closest competitor [Terex] (80% EV/Sales, 8.0x EV/EBITDA). [Manitowoc] is now trading in line with our SoP valuation.

Shares of Manitowoc have dropped 4.9% to $30.97 at 3:26 p.m. today, while Caterpillar has fallen 0.6% to $96.81, Deere has declined 1.4% to $88.55, Terex is off 1.7% at $42.97 and Joy Global has gained 0.3% to $56.67.