Analyst are bullish on Bucyrus International (BUCY) shares.
Company Description
Bucyrus is a leading manufacturer of large-scale excavation equipment used in surface mining. Bucyrus machines are used throughout the world by customers mining copper, coal, oil sands, iron ore and other minerals.
Company Sees Improving Demand
On its fourth-quarter conference call, Bucyrus president and CEO Tim Sullivan said that the company’s end markets are strong and improving. He noted that Bucyrus has a great deal of order activity pending, some of which was pushed from the fourth quarter of 2009 into the first quarter of 2010. The lone weak spot is the challenging U.S market.
Sullivan added that the company’s strongest geographic markets in 2010 will be Australia, Brazil, and India.
Fourth-Quarter Results
On February 18, Bucyrus reported better-than-expected results for the fourth quarter. While its sales decreased 10% to $645.8 million, the company’s earnings per share grew 21.6% to $1.07. That easily beat the Zacks Consensus Estimate for the fourth quarter of $0.92 per share.
The company also declared a quarterly dividend of $0.025 per share. The dividend is payable March 18 to Bucyrus stockholders of record on March 4.
Management didn’t provide specific EPS guidance for 2010. However, the company did indicate that it expects 2010 sales of $2,650 billion to $2,750 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $525 million and $550 million, not including the impact of its recent Terex acquisition.
Acquires Terex Mining
On February 19, Bucyrus acquired the mining business of Terex (TEX) for $1.3 billion in cash and stock.
This acquisition enables BUCY to extend its geographic footprint, diversify its product portfolio, and make it more competitive on a global basis. Bucyrus also doubles its addressable market from roughly $15 billion to over $30 billion.
Analyst Are Increasing Estimates
In the wake of a strong earnings report, bullish guidance, and an acquisition, analysts pushed up their earnings estimates for the next two years. In the last seven days, the Zacks Consensus Estimate for 2010 increased from $3.50 to $3.84, and the Zacks Consensus Estimate for 2011 jumped from $3.99 to $4.55.