Quad, Joy Global lead local stock rally

Economic Trends 2017

The stock market had a strong bull run in 2016, with the Dow Jones Industrial Average up 13.4 percent to an all-time high of nearly 20,000, the S&P 500 index rising 9.5 percent and the Nasdaq index up 7.5 percent.

The market was down in 2015 (the Dow fell 2.23 percent), and it got off to a slow start in 2016 with some concerns the economy was headed into a recession, said Katherine Schoen, senior vice president of wealth management strategy for Milwaukee-based Robert W. Baird & Co. Inc.

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But after February, the market rebounded until the fall, when attention turned to the election. There were nine consecutive days of stock market losses before Election Day, but then the market had an end-of-year rally after Donald Trump was elected and Republicans maintained control of both houses of Congress.

Southeastern Wisconsin’s publicly traded companies joined in the 2016 stock market rally, with local gainers far outnumbering decliners.

“(2016) was a good year for Milwaukee stocks,” Schoen said.

The biggest local stock gainers in 2016 were: Quad/Graphics Inc., up 189 percent to $26.88; and Joy Global Inc., up 122 percent to $28.00.

Sussex-based Quad became the largest long-run printing firm in North America in 2016 when Chicago-based R.R. Donnelley & Sons Co. spun off its long-run printing business.

Quad has been making big changes to become more efficient and more diversified. Since 2010 the company has executed more than a dozen acquisitions, doubled annual revenue to $4.7 billion and invested in expanded digital marketing capabilities. The company also closed 34 printing plants during that time and reduced its overall headcount by 10,000 employees. In November 2015, Quad announced a $100 million cost reduction plan, which included closing plants in Colorado, Connecticut, Pennsylvania and Georgia.

Quad reported a net loss of $641.9 million in 2015, but returned to profitability in 2016. For the first three quarters of the year, the company reported a profit of $7.4 million. Quad’s stock fell 59 percent in 2015, from $22.96 to $9.30, but made up all of that lost ground and then some in 2016.

“They’ve been able to right the ship a little bit,” Schoen said.

Milwaukee-based mining equipment manufacturer Joy Global had the biggest stock price decline among local companies in 2015, falling 73 percent from $46.52 to $12.61. The company’s stock price bounced back in 2016 as it made major cuts to operations, and then announced in July it would be acquired by Komatsu America Corp. for $3.7 billion. The deal is expected to close by mid-2017, pending shareholder and regulatory approval. Komatsu intends to operate Joy Global as a subsidiary and retain its brand names. The Milwaukee headquarters will continue to operate, according to a Joy Global spokesperson.

Only a handful of local companies suffered stock price declines in 2016, but the biggest losers were Connecture Inc., down 53 percent; Jason Industries Inc., down 52 percent; Bon-Ton Stores Inc., down 30 percent; and Strattec Security Corp., down 29 percent.

Milwaukee-based vehicle access control products manufacturer Strattec had the biggest dip in actual stock price, falling from $56.49 at the end of 2015 to $40.30 by the end of 2016. The company reported a 55.7 percent dip in net income for the 2016 fiscal year, falling from $20.65 million in 2015 to $9.15 million.

Boston Store parent company Bon-Ton, with dual headquarters in Milwaukee and York, Pennsylvania, continues to absorb big losses. The company lost $31.6 million in the third quarter of 2016, which was actually an improvement over its 2015 third quarter net loss of $34 million. The company’s stock price fell from $2.10 to $1.47 during 2016.

Bon-Ton is just one of several struggling department store retailers.

“You have a change in how consumers are spending their money; more online, less in stores,” Schoen said. “There has been a shift in retail.”

Milwaukee-based Jason Industries, the parent company for a number of manufacturers in the seating, finishing, components and automotive acoustics markets, saw its stock price fall from $3.78 to $1.80 in 2016. The company recently named a new chief executive officer, Brian Kobylinski. The company’s third-quarter net loss of $2 million was an improvement compared to $2.6 million for the third quarter of 2015.

Brookfield-based Connecture, which provides web-based information systems used to create health insurance marketplaces, saw its stock price fall from $3.61 at the end of 2015 to $1.68 at the end of 2016. The company reported a net loss of $3.1 million in the third quarter, up from $2.3 million a year ago.

Connecture did receive a $52 million investment from a private equity firm in May and acquired a Chicago health insurance consumer platform for $5 million in June.

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Andrew Weiland
Andrew Weiland is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, Weiland is a lifelong resident of the state. He lives in Muskego with his wife, Seng, and son, Zachary. He is an avid sports fan and enjoys coaching his son’s youth baseball and basketball teams.