Columbus McKinnon trades at $16.24 and has moved in lockstep with the market. Its shares have returned 16.4% over the last six months while the S&P 500 has gained 21.1%.
Is there a buying opportunity in Columbus McKinnon, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Columbus McKinnon Not Exciting?
We don’t have much confidence in Columbus McKinnon. Here are three reasons we avoid CMCO, plus one stock we’d rather own.
1. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Columbus McKinnon’s EPS grew at an unimpressive 6% compounded annual growth rate over the last five years, lower than its 15.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
2. Free Cash Flow Margin Dropping
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Columbus McKinnon’s margin dropped by 11.8 percentage points over the last five years. Almost any movement in the wrong direction is undesirable because of its already low cash conversion. If the trend continues, it could signal it’s becoming a more capital-intensive business. Columbus McKinnon’s free cash flow margin for the trailing 12 months was negative 8.2%.
3. Short Cash Runway Exposes Shareholders to Potential Dilution
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Columbus McKinnon burned through $122.8 million of cash over the last year, and its $2.40 billion of debt exceeds the $109.1 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.
Unless the Columbus McKinnon’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.
We remain cautious of Columbus McKinnon until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.
Final Judgment
Columbus McKinnon’s business quality ultimately falls short of our standards. That said, the stock currently trades at 8.2× forward P/E (or $16.24 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We’re fairly confident there are better investments elsewhere. We’d suggest looking at the most entrenched endpoint security platform on the market.
Stocks We Like More Than Columbus McKinnon
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
