Morningstar Rating

Stock Research and Analysis

by Adam Fleck, CFA

Bulls Say

Joy has reduced build times on some products by more than a third, while leveraging SG&A. These actions have led to cost savings and wider operating margins during the past five years.
As it gains market share in China, Joy has the opportunity to add a servicing component for many customers. Although this servicing aspect offers lower margins than parts sales, the increased dollar content should drive earnings growth.
Joy's purchase of LTI increases its mining equipment product offerings, while the purchase of IMM offers an opportunity to capture further share in China. Read more 

Bears Say

Over the long term, commodity demand is likely to be a major driver of Joy's business, and cyclicality could lead to years in which Joy's economic profitability is threatened.
Cat's acquisition of Bucyrus creates a competitor with the world's broadest portfolio of products. Customers may enjoy lower service costs by using a single supplier, which could lead to market share losses for Joy.
Joy enjoys a duopoly for many products, but faces substantial local competition in China. Although these OEMs typically can't match Joy's product or service quality, they can undercut on price. Read more 

Management

We think management has performed notably during the past several years, with strong returns on invested capital. CEO Michael Sutherlin assumed his role in 2006 from John Nils Hanson (who remains as chairman), but will retire at the end of calendar   Read more 

Profile

Based in Milwaukee, Joy Global manufactures electric shovels, dragline excavators, drills, and other mining equipment for use in surface (through its P&H brand) and   Read more 

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