What Happened?
Shares of material handling equipment manufacturer Columbus McKinnon (NASDAQ:CMCO) fell 41.9% in the afternoon session after the company reported weak third-quarter results, with revenue declining 7.9% y/y, missing expectations. Sluggish short-cycle demand and a struggling European market drove the decline, though price increases provided some cushion. In addition, gross margin slipped to 35.1% from 36.9% a year ago, while adjusted EBITDA fell 8.6%, missing Wall Street's forecasts. The weak growth and margins led to an earnings miss. Looking ahead, the company expects a mid-single-digit percentage revenue decline for fiscal 2025, reflecting ongoing demand softness and policy uncertainty. Overall, this quarter could have been better.
Following the results, DA Davidson analyst downgraded the stock's rating from Buy to Neutral and assigned a price target of $35.
Separately, the company announced the acquisition of Kito Crosby, a producer and manufacturer of products for lifting heavy loads, for $2.7 billion. The deal is expected to be funded with $2.6 billion in committed debt financing and a $0.8 billion perpetual convertible preferred equity investment from CD&R. This could raise additional concerns about the company's debt profile and ability to manage interest payments given its weak growth.
The shares closed the day at $20.87, down 41.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Columbus McKinnon? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Columbus McKinnon’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for Columbus McKinnon and indicate this news significantly impacted the market’s perception of the business.
Columbus McKinnon is down 43.9% since the beginning of the year, and at $20.73 per share, it is trading 54.7% below its 52-week high of $45.78 from May 2024. Investors who bought $1,000 worth of Columbus McKinnon’s shares 5 years ago would now be looking at an investment worth $567.38.
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