Mobile Mini Inc (NASDAQ:MINI) has had its lacklustre neutral rating reiterated by Baird Equity Research analysts in their latest comment on the stock. Although the company recently posted largely positive Q4 2015 results, the analysts note that issues such as reduced free cash flow and high leverage still keep them on the sideline.
Q4 earnings beat expectations
Mobile Mini’s adjusted Q4 EPS of $0.41 topped consensus expectations of $0.39. That was driven in part by better than expected improvement in adjusted EBITDA, which rose 106bps YoY to 40.9%. Mini reported revenue of $134.4 million for the quarter, which was up 9% from the same quarter last year.
Baird’s assessment of Mobile’s earnings report shows that volume gains in the company’s portable storage business provided much of the lift in the quarter.
Mini’s management expects the gains noted in Q4 to continue in the current quarter and year. As such, the company is guiding for mid-to-high single-digit top-line growth in 2016. Higher pricing and unit growth are some of the factors expected to drive gains in the current year.
Part of the reason Baird is cautiously optimistic despite its neutral rating on Mobile Mini is that it sees widespread investor apathy in the stock, which leaves room for future buying. The investor apathy seems to have roots in Mobile’s energy exposure. However, investors appear to overlook the strong execution that the management of Mobile has demonstrated in recent times. Together these factors make Baird believe that the stock is compelling for investors who can look beyond the energy and construction concerns.
Baird has adjusted its estimates for Mobile Mini. For 2016, the firm has shifted its revenue estimate to $535 million from $541 million. The consensus calls for revenue of $555 million in the year. Despite a cut in the 2016 revenue estimate, Baird has boosted its EPS estimate for the year to $1.52 from $1.45. That compares with the consensus estimate of $1.57.
As for 2017, Baird is looking for revenue of $558 million and EPS of $1.78 from Mobile Mini. The consensus estimate for 2017 calls for revenue of $599 million and EPS of $1.87.