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Company: Joy Global (JOY)
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  Joy Global (JOYG)/Bulls/Higher commodities prices means more purchases of mining equipment

Global commodity consumption is rising with demand from emerging markets leading the growth. Joy Global provides mining equipment used to extract these commodities and should benefit from the increase in production.

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  Joy Global (JOYG)/Bulls/Service contracts are a great revenue stream that is not as cyclical as equipment purchases

Demand for aftermarket service (assembling and repairing old equipment) is not as cyclical as demand for new equipment. Joy Global has placed emphasis on expanding this revenue generating branch. Furthermore, with the increase in new equipment sales over the past five years, Joy Global should benefit from servicing its branded products.

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  Joy Global (JOYG)/Bulls/Strategically located service centers are a competitive advantage

Using low-cost manufacturing sites and having strategically located service centers gives Joy Global a competitive advantage to provide low-cost equipment, while appealing to customers desire to be close to rebuilding and repair facilities.

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  Joy Global (JOYG)/Bulls/Quarterly Report and Forecast

Increasing Financial Outlook

The company announced second-quarter results that beat estimates and increased its 2008 earnings and sales forecasts.


On Thursday , May 29, Joy Global said that its fiscal second-quarter profit fell 7% as higher expenses offset increased sales, but that adjusted earnings still beat analyst estimates.

Net Income

Net income for the three months ended May 2 dropped to $72.1 million, or 66 cents per share, from $77.6 million, or 70 cents per share, in the year-ago period. Excluding one-time charges of 13 cents per share for a contract termination and seven cents per share related to an acquisition in February, Joy Global had adjusted earnings per share of 86 cents. The Street was expecting earnings per share of 72 cents, with such estimates typically excluding one-time charges.

Revenue

As for the top-line, revenue climbed 34% to $843.1 million from $629.2 million last year, and above the Street’s $798.3 million expectation. Joy Global also highlighted that orders reached a record $1.2 billion, up 69% from the prior-year period on strengthened conditions in the U.S. coal market and continued growing international demand. Breaking it down: original equipment orders jumped 102% and aftermarket orders grew 22%.

Management Outlook and Forecasts

Commenting on the results, Joy Global’s Chief Executive Mike Sutherlin said, “Despite orders that have set new company records multiple times over the past year, our list of qualified prospects continues to grow and indicates that our markets will continue to strengthen going forward.” He added that, “The fundamentals and outlook for our markets are stronger today that at any other time since this growth period began in 2003.” Also on Thursday, Joy Global increased its fiscal 2008 EPS estimate to $3.15-3.30, up from the company’s previous forecast of $2.96-3.22, and fiscal 2008 revenue of $3.3-3.4 billion, up from the company’s previous forecast of $3.1-3.3 billion. The Street is anticipating EPS of $3.27 on revenue of $3.2 billion.

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