JOY Reports Q2 Earnings

Joy Global reported earnings today, beating the general consensus. Joy reported an EPS of of $1.70, beating estimates of $1.36, and reported revenue of $1.32 billion, beating estimates of $1.18 billion. Bookings fell 36% to $695.4 million amid lower commodity prices. There was an 87% decrease in the order of original mining equipment, part of a 27% decrease of surface mining equipment. Underground mining machinery bookings also decreased 43%, and net sales fell 5% to $1.3 billion. Joy also intends to buyback $1 billion in stock.

            Joy fell 4.72% today at close, driven by consumer being skeptic on the future of the company. Joy is maintain their fiscal year revenue guidance of $4.9-5 billion, despite them coming out and stating that the market would have a difficult time sustaining anything about $4 billion. Joy’s 2014/2015 EPS guidance is way above where it should be, and should be getting corrected in the coming weeks.

For the future, Joy is expected a less than stellar fourth quarter, as they have depleted $1 billion of their backlog. While Joy is stating that the coal market is beginning to recover, the numbers for that market continue to decline. I see Joy as more of a value trap right now as they have projections that won’t be met and are preparing for a subpar quarter; we should evaluate our options of bringing it into the portfolio going forward.