When a company's numbers fail to live up to expectations, the markets are often quick to react and dump its shares. Manitowoc (NYS: MTW) went through this last Friday, when its shares shed 10% after its first-quarter earnings missed estimates. But is the market's reaction always justified?

I don't think it was in Manitowoc's case.

Building where it matters
Manitowoc's top-line growth was strong, and industry trends seem favorable in the near future. Even before it released its numbers, peers had given us enough evidence of the uptick in construction activity in the U.S. Sales in Caterpillar's (NYS: CAT) largest division, construction industries, rose 13% in the first quarter, with most of that growth coming from North America. Terex's (NYS: TEX) first-quarter top line surged 45% from the year-ago period thanks largely to increased activity. It's thus understandable that expectations for Manitowoc were high, especially after an outstanding fourth quarter.


Sales in its Crane division climbed 29% from the comparable period last year. Everything went well -- orders were 10% higher and backlogs were up 16%, both from the year-ago quarter. In fact, a backlog value of $931 million represents the highest such level since the financial crisis.

The crane business is certainly looking good, and Manitowoc is making sure it complements growth in the U.S. with that in the emerging markets. The company is set to become the first player to make rough-terrain cranes in Brazil. Manufacturing in the new facility kicked off last month, and deliveries should start by mid-year. With the nation gearing up to host the 2014 World Cup and 2016 Summer Olympics, Manitowoc seems to have hit the right note here.

From cranes to food
Products launched last year seem to be doing a good job with strengthening Manitowoc's other business, food-service equipment. Indigo ice machines, in particular, have emerged as the winner. As in the fourth quarter, this product played a major role in pushing up the division's revenue, boosting it by 4% from the year-ago quarter. What's more, these ice machines, along with the company's unique blend-in-cup dispensers, were recently recognized for their performance by none other than fast-food king McDonald's (NYS: MCD) , which is also one of its customers. McDonald's had, in the past, publicly acknowledged that Manitowoc's Frymaster line helped reduce its carbon footprint.  

The association with major fast-food players is what I feel will help take Manitowoc far, helping it gain greater traction not just in the U.S. but also in the emerging markets where these companies are investing heavily. After Singapore and China, it opened a "test kitchen" in India during the first quarter.

The Foolish bottom line
True, Manitowoc's first-quarter net profit, at $100,000, is nothing to write home about, but let's not forget how good a turnaround this was from the loss of $52.4 million incurred in the year-ago quarter. Also, larger tax expenses played a big role in muting profits this time. As long as Manitowoc sees healthy top-line growth, there continues to be real potential for it in the future.

Manitowoc has a solid foothold in Brazil, but it's far from the only company that is profiting from growth in Latin America. The company that our chief investment officer picked as The Motley Fool's Top Stock for 2012 is a retailer that is revolutionizing commerce in Latin America. You can get access to the name of this company by clicking here -- it's absolutely free.

At the time this article was published Neha Chamaria does not own shares of any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of McDonald's. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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