HY

Hyster-Yale is a classic cyclical industrial caught at a trough. The MD&A is explicit that "the materials handling business historically has been cyclical because the order rate for lift trucks fluctuates depending on the economic activity level" — and the numbers confirm we're on the down-leg: FY2025 revenue fell 12.5% to $3.77B and the company swung to a -$60.1M net loss (diluted EPS -$3.40) from +$142M a year earlier. Gross profit dropped 29.3% to $633M and operating income turned negative (-$22.1M, -0.6% margin), so this is an operating-deleverage story, not a one-off charge. The five-year history — losses in FY2021/FY2022, profits in FY2023/FY2024, back to a loss in FY2025 — makes the cyclicality undeniable and argues against extrapolating either the peak or the trough.

The valuation is what keeps this from being a sell. Market cap is just $565M on $3.77B of revenue (P/S ~0.15x), and even at a trough the business generated $86.1M of operating cash flow. That said, the "cheapness" is partly a function of the low-margin, dealer-distribution model — the stock trades at $31.99 versus book value of ~$26.7/share ($472M equity / 17.7M shares), so ~1.2x book is only modestly cheap on assets. The real optionality is earnings normalization: mid-cycle net income of ~$142M implies ~$8 of EPS, so a return toward mid-cycle would re-rate the shares meaningfully from here.