CMI - Altra Industrial Motion Hit Hard By Adverse End-Market Exposures And Near-Term Margin Weakness

• Altra shares have significantly underperformed, and I believe the company's exposure to heavy vehicles, wind power, and short-cycle markets may explain some of the weakness.
• Margin leverage will be a challenge in the near term, as profitable markets (Chinese trucks) are weak and price actions lag input cost inflation.
• Selling Jacobs makes sense from a long-term strategic standpoint, but I'm surprised the company didn't get a higher multiple for a very profitable business.
• Altra is clearly in the doghouse, but revenue growth of around 4%, EBITDA margins in the high-teens to low-20%'s, and FCF margins in the low double-digits can support a meaningfully higher share price.

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