Manitowoc Company, Inc. (MTW): Is the Market in Denial About This Stock?

I was checking out McDonald’s Corporation (NYSE:MCD) earnings report while munching some salad when I realized there’s nothing to write home about. Flattish top and bottom lines…nothing interesting. But Mickey D’s lackluster earnings report almost instantly took my attention to another company that is set to report numbers next week. No, it’s not another restaurant chain, but an equipment maker that is also a supplier to McDonald’s.

Manitowoc Company, Inc. (NYSE:MTW)Food-service equipment is an equally important business for crane maker Manitowoc Company, Inc. (NYSE:MTW), and Mickey D an important customer. So If McDonald’s didn’t do well last quarter, will Manitowoc Company, Inc. (NYSE:MTW) be ok?

Not the right recipe

Nearly 40% of Manitowoc Company, Inc. (NYSE:MTW)’s revenue comes from its food-service equipment business, so how the Big Mac and other restaurant chains fare holds tremendous significance in determining Manitowoc Company, Inc. (NYSE:MTW)’s fate. McDonald’s first-quarter revenue inched 1% higher even as comparable sales fell by the same percentage. Net income remained unchanged year over year, despite the new McRibs and McWraps and Fish McBites.

McDonald’s is one of the most important and oldest customers of Manitowoc Company, Inc. (NYSE:MTW), so any slowdown for the fast-food giant doesn’t bode well for the equipment provider. So you shouldn’t expect much from Manitowoc when it drives in with its first-quarter numbers on April 30, right?

Analysts expect…wait, what? Whoa! Analysts expect a whopping 14 times jump in Manitowoc’s first-quarter earnings per share on 6% higher revenue. Now where is that coming from? It’s certainly not its foodservice-equipment business. So are things really as strong for the construction-equipment business? The world’s largest construction-equipment maker certainly doesn’t think so.

Is the market over confident?

Caterpillar Inc. (NYSE:CAT) paints a dreary picture. Its construction industries division’s fourth-quarter sales slumped 25% year over year. Backlog value, which is a key indicator of future potential revenue, plunged 34% on weak orders. Caterpillar Inc. (NYSE:CAT) reduced inventory substantially by $2 billion during the quarter, and the worst isn’t over yet. It forecasts the first quarter to be the slowest as dealers continue to lower inventories, so much so that it could dent its revenue by $2 billion. By the time Manitowoc reports numbers, Caterpillar Inc. (NYSE:CAT) would have already given investors an idea of what to expect. Oh, not just Caterpillar Inc. (NYSE:CAT), but peer Terex Corporation (NYSE:TEX) would also have reported numbers by then.