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Category: Stock Market and Delta Apparel
Date: 4 February 2020 Stock Price: $83.57 We take a look at the 4th quarter of their 2019 fiscal year earnings report of Simpson Manufacturing, a company that through its subsidiary, Simpson Strong-Tie Company Inc., designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls
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About Simpson Manufacturing
Simpson Manufacturing Co., Inc., headquartered in Pleasanton, California, through its subsidiary, Simpson Strong-Tie Company Inc., designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and concrete construction products, including adhesives, specialty chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials. The Company's common stock trades on the New York Stock Exchange under the symbol "SSD."
Overview of Simpson Manufacturing's 4th quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $265.510 million (up from $241.848 million for the same quarter in the previous year)
- Net sales increased by 8.54% over the last 12 months
- Cost of sales: $152.457 million (up from $143.461 million for the same quarter in the previous year)
- Cost of sales increased by 6.13% over the last 12 months
- So some margin gain for Simpson Manufacturing wit their net sales increasing at faster rate than their cost of sales
- Net income: $28.057 million (up from $12.757 million for the same quarter in the previous year)
- Diluted earnings per share: $0.63 (up from $0.28 for the same quarter in the previous year)
- PE ratio of Simpson Manufacturing: 31.72
- Dividend declared: $0.23
- Dividend yield of Simpson Manufacturing: 1.1%
- Diluted number of shares in issue: 44.684 million (down from 45.776 million for the same quarter of the previous year)
- Cash and equivalents: $230.210 million
- Cash and equivalents per share: $5.15
- Cash and equivalents makes up 6.16% of Simpson Manufacturing's current market capital
- Cash and equivalents makes up 21.02% of Simpson Manufacturing's total assets
- Trade and other receivables: $139.364 million
- Trade and receivables makes up 12.72% of Simpson Manufacturing's total assets
- Inventories of Simpson Manufacturing: $251.907 million
- Inventories makes up 22.99% of Simpson Manufacturing's total assets
- Goodwill in Simpson Manufacturing: $131.879 million
- Goodwill makes up 12.04% of Simpson Manufacturing's total assets
- Goodwill per share in Simpson Manufacturing: $2.95
- Stockholders equity in Simpson Manufacturing: $891.957 million
- Stockholders equity per share in Simpson Manufacturing: $19.96
- Simpson Manufacturing is trading at 4.18 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at
Simpson Manufacturing's management commentary on their 4th quarter 2019 earnings
Simpson Manufacturing Co., Inc. (the “Company”) (NYSE: SSD), an industry leader in engineered structural connectors and building solutions, today announced its financial results for the fourth quarter of 2019 and full-year of 2019. Refer to the “Segment and Product Group Information” table below for additional segment information (including information about the Company’s Asia/Pacific segment and Administrative and All Other segment).
“We made significant operational and financial progress in 2019 resulting in solid organic growth, enhanced operating efficiencies and improved profitability,” commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. “Our 2019 net sales improved 5.4% over 2018 to $1.14 billion, driven by higher sales volume, despite the adverse weather conditions experienced in the first half of the year and lapping the benefit of higher sales prices following the price increases we implemented in mid–2018. However, our fourth quarter gross margin of 41.9% remained under pressure. As such, our 2019 full– year gross margin of 43.3% was slightly lower than anticipated. Aside from the factors impacting gross margin in 2019 including increased material, labor, factory and overhead costs, and to a lesser extent, sales mix, we continue to hold one of the highest margin profiles in the industry by continuing to effectively manage elements within our control including: maintaining a best–in–class customer experience, high–quality trusted products, and deep industry relationships.”
Ms. Colonias continued, “We successfully maintained our focus on rationalizing our cost structure in 2019, resulting in a 100 basis point year–over–year improvement in our total operating expenses as a percentage of net sales to 27.9%. As a result, we generated strong earnings of $2.98 per diluted share, up 9.6% over 2018. As a testament to our ongoing confidence in our business, we were pleased to have returned $101.1 million to our stockholders through share repurchases and dividends. Looking ahead to fiscal 2020, we remain focused on progressing towards our financial targets to position Simpson for long-term sustainable and profitable growth.”
Ms. Colonias continued, “We successfully maintained our focus on rationalizing our cost structure in 2019, resulting in a 100 basis point year–over–year improvement in our total operating expenses as a percentage of net sales to 27.9%. As a result, we generated strong earnings of $2.98 per diluted share, up 9.6% over 2018. As a testament to our ongoing confidence in our business, we were pleased to have returned $101.1 million to our stockholders through share repurchases and dividends. Looking ahead to fiscal 2020, we remain focused on progressing towards our financial targets to position Simpson for long-term sustainable and profitable growth.”
Simpson Manufacturing (NYSE: SSD) stock price history
The image below, obtained from Google, shows the stock price history of Simpson Manufacturing over the last 5 years. And its been a very good time for Simpson Manufacturing stockholders The group's stock traded at around $33.70 a stock 5 years ago and is currently trading at $83.57 a stock. That's a significant return of 147.98% provided to Simpson Manufacturing stockholders over the last 5 years.
Simpson Manufacturing stock is trading at very close to its 52 week high of $87.70 and far away from its 52 week low of $54.99 which to us is a clear indication that the short term sentiment and momentum of Simpson Manufacturing is very positive
Simpson Manufacturing stock is trading at very close to its 52 week high of $87.70 and far away from its 52 week low of $54.99 which to us is a clear indication that the short term sentiment and momentum of Simpson Manufacturing is very positive
Recent coverage of Simpson Manufacturing
The extract below discusses the latest regarding Delta Apparel as obtained from Fool.com
More than a half-century ago, Barclay Simpson started a company that would become an industry standard for construction fasteners. Today, the Simpson Strong-Tie brand is the leading structural connector and fastener manufacturer in the United States and Europe. Barclay Simpson's personable demeanor instilled a culture that is his legacy five years after his passing at age 93. The current leadership team at Simpson Manufacturing (NYSE:SSD), however, isn't dwelling on past success. In October 2017, a 2020 plan was revealed to lead the company into the future. Its plan reflects where certain metrics will stand by the end of 2020, and the company has so far shown mixed results.
Improve performance, enhance value
The five pillars of Simpson Manufacturing's plan are:
Read the full article here
More than a half-century ago, Barclay Simpson started a company that would become an industry standard for construction fasteners. Today, the Simpson Strong-Tie brand is the leading structural connector and fastener manufacturer in the United States and Europe. Barclay Simpson's personable demeanor instilled a culture that is his legacy five years after his passing at age 93. The current leadership team at Simpson Manufacturing (NYSE:SSD), however, isn't dwelling on past success. In October 2017, a 2020 plan was revealed to lead the company into the future. Its plan reflects where certain metrics will stand by the end of 2020, and the company has so far shown mixed results.
Improve performance, enhance value
The five pillars of Simpson Manufacturing's plan are:
- Continued focus on organic growth.
- Rationalize cost structure to improve profitability.
- Improve working capital management and balance sheet discipline.
- Improve return on invested capital (ROIC).
- Increase capital return to shareholders.
Read the full article here
Simpson Manufacturing (NYSE: SSD) latest stock valuation
So what do we value Simpson Manufacturing stock at based on their latest earnings release? Based on Simpson Manufacturing latest earnings report our valuation model provides a target price (full value price) for Simpson Manufacturing stock at $62.80 a stock . We therefore believe the stock of Delta Apparel is overvalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $62.80. A good entry point into Simpson Manufacturing would therefore be at $56.50 or below.
Since the stock of Simpson Manufacturing is trading at well above our suggested entry point we rate the stock of Simpson Manufacturing as a sell
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $62.80. A good entry point into Simpson Manufacturing would therefore be at $56.50 or below.
Since the stock of Simpson Manufacturing is trading at well above our suggested entry point we rate the stock of Simpson Manufacturing as a sell
Next earnings release of Simpson Manufacturing
It is expected that Simpson Manufacturing will release their 1st quarter 2020 earnings report in early May 2020