Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Mining For Profits: Is Joy Global Inc. (JOY) The Best Bet?

Page 1 of 2

Joy Global Inc. (NYSE:JOY)’s shareholders have not done particularly well over the last few years.  This leading maker of mining equipment has been hit with reduced demand for its products, primarily driven by the reduced usage of coal due to cheap natural gas, as well as the generally uncertain global economy.  As a result, shares are off about 40% from their peak of $103 in 2011.  With Q1 2013’s earnings set to be released next Wednesday (Feb. 27), investors will be looking for signals that the time is right to jump back in.

As mentioned, Joy Global is a leading manufacturer of mining equipment and related parts and services.  The company operates in two major segments, underground mining (53% of sales) and surface mining (47%).  Joy Global maintains facilities and offices in most major mining centers of the world, such as Australia, Brazil, Canada, Chile, China, India, Russia, South Africa, and the U.S.

Joy Global Inc. (NYSE:JOY)Underground mining includes all equipment used in the extraction of minerals from underground mines, including continuous miners, road headers, shuttle cars, conveyor trains, and a long list of other products.  Surface mining is the world’s largest producer of electric mining shovels, and also produces rotary blasthole drills and walking draglines.

The company has been very aggressive with acquisitions in order to expand its operations, most recently with the $1.1 billion acquisition of LeTourneau in 2011, and the acquisition of China-based International Mining Machinery Holdings, completed in May 2012.

With major competitors including Caterpillar Inc. (NYSE:CAT), whose 2011 acquisition of Bucyrus makes them Joy Global’s biggest competitor; Komatsu Ltd (ADR) (PINK:KMTUY), a Japanese heavy equipment manufacturer; and Terex Corporation (NYSE:TEX)., a slightly smaller but very significant player in the mining equipment game.  So, assuming you think the mining industry has brighter days ahead, is Joy Global the best bet, or is one of these others the way to go?

Joy Global trades for just 8.6 times TTM earnings, which are unfortunately projected to decline in 2013, from $7.24 to $6.20.  After that, however, their business is projected to pick up, and consensus estimates call for $6.49 and $7.87 in 2014 and 2015, respectively.  With the company’s outstanding history of growing revenues (see chart below), trading at just 7.9 times 2015’s earnings sounds pretty good to me.

Let’s take a look at its peers and see if we can find an even better opportunity…

Caterpillar, the largest in the group by far, trades at a slightly higher premium of 10.7 times TTM earnings, and is also expected to have a similar earnings drop this year, with $8.03, $9.42, and $11.15 per share expected over the next three years.  In terms of far-off earnings, Caterpillar trades at 8.6 times 2015’s projected earnings, slightly more than Joy’s — but bear in mind that with the increased diversification of Caterpillar’s business, there is inherently less risk associated with investing.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!