JBT's Q1 Performance Is Solid, Though Near-Term Challenges Persist; Raising Our Fair Value Estimate

Narrow-moat rated JBT had a solid first quarter, and we're raising our fair value estimate to $123 per share from $109. Total revenue grew about 12% on both a reported and organic basis to $469 million, led by FoodTech’s 13% year-over-year rise in sales. Nonetheless, consolidated operating margins progressed about 230 basis points year over year to 10%, albeit just about 20 basis points sequentially. Orders went up a whopping 54% year on year in AeroTech despite modest revenue gains caused by supply chain disruptions. While the stock went on a tear after the earnings release off clearly low expectations, our fair value estimate increase reflects our current view that we were baking in too-high corporate-related expense in the out years of our model. We base this assessment on recent historical experience (most important) and management commentary at the recent investor day. Clearly, JBT’s valuation is sensitive to multiple inputs on its bottom line.