Friday, February 25, 2011

Joy Global Inc. (NASDAQ: JOYG): Q1 Earnings Preview

Joy Global Inc. (NASDAQ: JOYG) is scheduled to release its fiscal first-quarter earnings before the opening bell on Wednesday, March 2, 2011. Analysts, on average, expect the company to report earnings of $1.07 per share on revenue of $881.12 million. In the year ago quarter, the company reported earnings of 73 cents per share on revenue of $729.22 million. 

Joy Global Inc. engages in the manufacture and servicing of mining equipment for the extraction of coal, and other minerals and ores worldwide. The company operates in three segments: Underground Mining Machinery, Surface Mining Equipment, and Crushing and Conveying. Underground equipment makes up almost half of the company's net revenue.

In the preceding fourth-quarter, the Milwaukee, Wisconsin-based company's net income was $146.34 million or $1.39 per share compared with  profit of $124.02 million or $1.20 per share, in the year-ago quarter. Revenue  increased 9% to $1.05 billion from $963.53 million. Analysts, on average, expected the company to report earnings of $1.16 per share on revenue of $ $922.84 million.  

The company's efforts to grab more business in the booming steel and power producing markets in China are paying off, allowing it to raise profit and revenue targets. Joy Global expects to sustain its strong performance in 2011. For fiscal 2011, the company expects earnings per share to be between $5.00 and $5.30 and revenues in the range of $3.9 billion and $4.1 billion. "We expect fiscal 2011 to be a year of increasing order rates and improving financial results. Increased production schedules should translate into top line growth," Mike Sutherlin, president and chief executive officer, said in November.

Joy Global is likely to benefit from a rebound in commodity markets and a faster-than-expected economic recovery. Commodity prices directly impact the demand for Joy Global's products and services. Meanwhile, the farm and construction machinery sector is benefiting from a global surge in capital expenditure in the agriculture and mining sectors. After putting off upgrades and repairs due to weak commodity prices, miners are beginning to spend money on equipments now that coal copper, and iron ore prices have recovered.Its portfolio is dominated by the coal industry, which accounts for three-quarters of revenues.

Industry experts expect Joy Global to flex its emerging market muscle and expand its product range in response to Caterpillar's (NYSE: CAT) aggressive plans to exploit the growth opportunities in the mining sector.

Among other developments, Standard & Poor's recently said that it would add heavy-duty mining equipment maker Joy Global to its S&P 500 index.

Full Disclosure: None.
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