John Bean Technologies Corp. (JBT, Financial) has been putting up awesome growth with food and aerospace technology. Sales and earnings have been growing, profit margins are high and the balance sheet is strong. Royce Investment Partners is a major holder.
The stock trades for $118.63, there are 31.67 million shares and the market cap is $3.75 billion. Earnings per share are $4.04 and the price-earnings ratio is 29. The dividend is 40 cents and the dividend yield is 0.3%.
According to its most recent quarterly report, sales grew from $1.35 billion in 2016 to $1.937 billion for the trailing 12 months. Earnings grew from $67.6 million to $129.8 million over that time. John Bean has put up some great growth and controlled expenses. Profit margins are 6.70% and return on equity is 27.22%.
Free cash flow was $122 million last year, which would put the free cash flow yield at 3.25%. The balance sheet shows $491 million in cash and $354 million in receivables. The liability side shows $187 million in payables and $769 million in debt. That is an extremely strong balance sheet.
Around 29% of sales are Aerotech and 71% are Foodtech. Forty percent of sales are reoccurring, which is typical in food tech. John Bean has to service its products. The Aerotech division markets boarding bridges for airliners, air units that planes use while parked, design facility infrastructure and sells aftermarket parts. The growth comes from Foodtech.
I found the stock by reading an interview with Chuck Royce (Trades, Portfolio) in Barron’s. He noted that John Bean allows customers to follow their food and address regulatory issues. Management has put out growth targets of $2 billion to $2.1 billion in sales, Ebitda margins of 14.25% to 15.25% and return on invested capital of 15% for 2020.
The real estate portfolio appears to be sizable. I count 17 warehouses from about 50,000 square feet to a quarter million. I would be curious to know what this portfolio is worth. Hidden assets like this can serve as a buffer in hard times.
Morningstar notes that the food division has 40,000 installed united and aerospace 30,000. Morningstar put out a $99 fair estimate back in December, which John Bean’s stock blew through.
You can see why the stock trades at a such a nice valuation. It’s the perfect growth stock—sales and earnings have been growing, profit margins and return on equity are high and the balance sheet is strong. The food division has been exploding in growth and the stock could keep going.
Disclosure: We do not own shares.
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