Updated 3/10/25
Hyster-Yale Materials Handling, Inc. (HY) has been a key player in the material handling industry for years, designing and manufacturing forklifts and related equipment. Its business spans multiple markets, serving industries that rely on logistics, warehousing, and industrial operations.
While industrial stocks can be volatile, HY has managed to carve out a space for itself among dividend investors looking for consistent income. The company’s dividend yield sits above 3%, making it an interesting option for those focused on cash flow. However, with earnings volatility and a stock price that has seen better days, the question is whether HY can continue delivering reliable returns.
Key Dividend Metrics
📌 Dividend Yield – 3.15%
📌 Annual Dividend Rate – $1.40 per share
📌 Payout Ratio – 17.1%
📌 5-Year Average Dividend Yield – 2.83%
📌 Dividend Growth – Consistent but modest
📌 Ex-Dividend Date – February 28, 2025
📌 Next Dividend Payment – March 14, 2025
Dividend Overview
For income investors, HY’s 3.15% dividend yield is one of its biggest selling points. This is slightly above its 5-year average yield, which suggests either undervaluation or a focus on rewarding shareholders. More importantly, the payout ratio is just 17.1%, meaning the company is keeping most of its earnings for reinvestment while still paying a solid dividend.
One thing to keep in mind is that HY isn’t a company that aggressively increases its dividend each year. Instead, it has focused on maintaining steady payouts, which can be reassuring for investors looking for reliability rather than rapid growth. The dividend looks safe based on current earnings, but if profits continue to decline, management may take a more cautious approach to future increases.
Dividend Growth and Safety
HY’s dividend is backed by strong cash flow and a relatively low payout ratio, both of which suggest that the company has plenty of room to sustain its payments. However, growth has been slow, and HY has not been known for big dividend hikes.
The company retains over 80% of its earnings, which gives it flexibility in tough times. This conservative approach to capital allocation is a plus for investors who prioritize long-term sustainability. Even during economic downturns, HY should have the ability to maintain its dividend as long as cash flow remains stable.
That said, the recent decline in earnings is something to monitor. If profitability takes a bigger hit in future quarters, HY could shift priorities toward strengthening its balance sheet rather than increasing shareholder returns.
Chart Analysis
Price Action
Hyster-Yale (HY) has been in a clear downtrend for several months, with the stock struggling to find solid footing. The most recent close at $44.51 puts it near the lowest levels seen over the past year. There was a brief attempt at recovery in late 2024, but that momentum quickly faded, and the stock resumed its decline.
The price has been making lower highs and lower lows, a textbook sign of a bearish trend. The latest drop took the stock below the previous support level around $50, indicating that sellers remain in control.
Moving Averages
The 50-day moving average is trending downward and sits well below the 200-day moving average, reinforcing the bearish sentiment. This kind of setup is commonly referred to as a “death cross,” which often signals extended weakness ahead.
The price is currently trading significantly below both moving averages, suggesting that HY is still deep in a downtrend with no clear signs of reversal. Until the stock can reclaim the 50-day moving average and show sustained strength, the trend remains negative.
Volume and Market Participation
Volume has been mixed, with occasional spikes, particularly around key price drops. This suggests that selling pressure has been intense during breakdowns, with brief periods of increased buying that ultimately failed to shift the trend.
A few high-volume days stand out, particularly during the decline in November and again in early 2025. These surges in volume likely indicate institutional selling, which can weigh on the stock for an extended period.
Relative Strength Index (RSI)
The RSI is hovering in oversold territory, signaling that the stock has been under consistent selling pressure. While an oversold RSI can sometimes precede a bounce, it’s not a guarantee of a reversal. In a prolonged downtrend like this, stocks can remain oversold for extended periods.
If the RSI starts to rise while price remains weak, it could indicate a potential divergence, but for now, it’s simply confirming the existing bearish momentum.
Recent Candle Behavior
The last five trading days show indecisive price action. The stock has tested lower levels but hasn’t seen strong buying interest. The wicks on some of these candles suggest attempts to push higher, but each time, selling pressure capped the gains.
This kind of choppy movement near lows often signals uncertainty, where the stock could either stabilize or continue sliding lower. A strong bullish candle with volume would be needed to suggest that buyers are stepping in with conviction.
Analyst Ratings
📈 Upgrades
🔹 Northland Capital Markets upgraded HY from “Market Perform” to “Outperform” with a new price target of $90. The decision was driven by improved operational efficiencies and optimism around the company’s strategic direction. Analysts noted that recent cost-cutting measures and supply chain improvements could enhance margins, making the stock more attractive at current levels.
📉 Downgrades
🔻 Northland Capital Markets also issued a downgrade earlier, shifting HY from “Outperform” to “Market Perform” despite adjusting the price target upward to $90. The downgrade stemmed from concerns over increasing competition in the material handling space and the potential for market saturation. Analysts believe that while the company has made strides operationally, external headwinds could limit near-term growth.
🎯 Consensus Price Target
The consensus price target for HY is $80, indicating potential upside from current levels. Analysts appear divided on the stock, weighing its cost-cutting progress against industry-wide pressures.
Earnings Report Summary
Hyster-Yale’s latest earnings report painted a mixed picture, with some bright spots but also a few challenges that investors should keep an eye on. The company brought in $1.02 billion in revenue, which was slightly lower than last year’s $1.06 billion. Meanwhile, operating profit came in at $33.1 million, down from $90.6 million in the same quarter a year ago. Net income took a hit as well, dropping to $15.7 million compared to $51.5 million last year.
Lift Truck Business Performance
The core Lift Truck segment remained the company’s biggest revenue driver, pulling in $967.4 million, which was actually up a little from $952 million last year. That bump was mostly thanks to higher selling prices and a better mix of products. However, shipments were down, especially in Europe, as supply chain disruptions slowed things down.
Even though revenue was up, profits in this segment didn’t follow the same path. Gross profit dropped by 7% to $172.9 million, and operating profit slid 40% to $39 million. Rising freight costs and lower margins on parts and service sales were key factors behind this decline.
Bolzoni Segment
One bright spot in the report was Bolzoni, the company’s attachment manufacturing division. Sales grew to $97.6 million, up 5% from the previous year. More importantly, profits in this segment more than doubled to $6.2 million, thanks to stronger demand for higher-margin products and better efficiency in production.
Nuvera Segment
On the flip side, the Nuvera hydrogen fuel cell division had a rough quarter. Revenue dropped sharply to just $0.3 million, down from $1.5 million a year ago. Losses widened as well, with an $11.8 million operating loss, compared to $9.4 million last year. The slow adoption of hydrogen fuel cell technology and delays in new product development weighed heavily on the segment’s performance.
Looking Ahead
Despite some struggles, Hyster-Yale expects its full-year net income to be in line with last year’s results. Management is focusing on improving operations, fixing supply chain issues, and pushing forward with strategic initiatives to navigate the current market conditions. The company is aiming for long-term growth, but for now, investors may need to be patient as it works through some near-term headwinds.
Financial Health and Stability
A healthy balance sheet is key to maintaining dividends, and HY’s financial position has both strengths and weaknesses.
- The company holds $541.8 million in total debt, with a debt-to-equity ratio of 109.65%. This is on the higher side, meaning the company relies more on borrowed money than shareholder equity.
- Cash reserves sit at $100.9 million, which provides a financial cushion but isn’t overwhelmingly strong.
- The current ratio of 1.36 suggests that HY has enough short-term assets to cover its short-term liabilities, but it’s not an excess of liquidity.
Looking at profitability, HY posted a 3.3% net margin and an 8.03% return on assets. Return on equity is a much stronger 32.01%, indicating that management is efficiently using shareholder capital to generate profits.
One concern is earnings volatility. Quarterly earnings growth was down 59.1% year-over-year, which raises questions about near-term profitability. However, with EBITDA at $311.5 million, HY still has solid operating cash flow to work with.
Valuation and Stock Performance
From a valuation standpoint, HY looks inexpensive. The stock is trading at 5.54 times trailing earnings, which makes it seem like a bargain. However, forward P/E jumps to 21.19x, suggesting that analysts expect lower earnings in the near future.
Other valuation metrics reinforce the idea that HY is currently undervalued:
- Price-to-sales is just 0.18, meaning the stock is trading at a fraction of its total revenue.
- Enterprise value to EBITDA is 4.10, well below industry norms.
- Price-to-book ratio sits at 1.66, which is reasonable based on historical levels.
Despite these attractive valuation numbers, the stock has struggled. Shares are down more than 23% over the past year, significantly underperforming the broader market. HY’s 50-day moving average is at $51.46, while the 200-day moving average is much higher at $61.14, suggesting a downtrend.
For long-term dividend investors, this could be an opportunity to buy at a discount. But for those looking for capital appreciation, the stock’s recent weakness may be a red flag.
Risks and Considerations
📉 Cyclical Business – HY operates in an industry that is highly dependent on economic conditions. If industrial demand slows, orders for forklifts and material handling equipment could drop, putting pressure on revenue.
🏦 Debt Load – With a debt-to-equity ratio above 100%, HY is more leveraged than some of its peers. Rising interest rates could make debt repayment more expensive, impacting future cash flow.
📊 Earnings Volatility – The steep decline in quarterly earnings growth is a concern. If this trend continues, HY may need to adjust its capital allocation strategy, which could affect future dividends.
📉 Stock Price Weakness – Shares have been in a sustained downtrend, trading well below moving averages. If earnings don’t recover, HY could continue to struggle, limiting upside potential for investors.
Despite these risks, the company has a strong market position and a reliable history of paying dividends. Investors who can tolerate some short-term uncertainty may find value in holding for the long run.
Final Thoughts
For dividend investors, HY offers an attractive yield with a conservative payout ratio, making it a relatively safe income option in the industrial sector. The company has maintained steady dividends over the years, and its financials suggest that the current payout is sustainable.
However, recent earnings weakness and stock price declines could be warning signs. If HY can stabilize earnings and continue generating strong cash flow, investors will likely be rewarded with continued dividend payments and potential long-term appreciation.
Right now, the stock appears undervalued based on historical metrics, but whether it’s a good investment depends on an investor’s risk tolerance. Those comfortable with cyclical stocks and long-term hold strategies may see this as a buying opportunity, while those looking for more stability might prefer companies with stronger earnings growth.
Regardless, HY’s solid dividend track record and financial discipline make it a stock worth watching.
Recent Comments