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Category: Stock Market and Worthington Industries
Date: 18 December 2019 Stock Price: $43.50 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Worthington Industries a global diversified metals manufacturing company.
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About Worthington Industries
Worthington Industries is a leading global diversified metals manufacturing company with 2019 fiscal year sales of $3.8 billion. Headquartered in Columbus, Ohio, Worthington is North America’s premier value-added steel processor providing customers with wide ranging capabilities, products and services for a variety of markets including automotive, construction and agriculture; a global leader in manufacturing pressure cylinders for propane, refrigerant and industrial gasses and cryogenic applications, water well tanks for commercial and residential uses, CNG and LNG storage, transportation and alternative fuel tanks, oil & gas equipment, and consumer products for camping, grilling, hand torch solutions and helium balloon kits; and a manufacturer of operator cabs for heavy mobile industrial equipment; laser welded blanks for light weighting applications; automotive racking solutions; and through joint ventures, complete ceiling grid solutions; automotive tooling and stampings; and steel framing for commercial construction. Worthington employs approximately 11,000 people and operates 75 facilities in 10 countries.
Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as the basis for an unwavering commitment to the customer, supplier, and shareholder, and as the Company’s foundation for one of the strongest employee-employer partnerships in American industry.
Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as the basis for an unwavering commitment to the customer, supplier, and shareholder, and as the Company’s foundation for one of the strongest employee-employer partnerships in American industry.
Overview of Worthington's 2nd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise
- Sales: $827.637 million (down from $958.226 million from the same quarter of the previous year)
- Revenue decreased by -13.38% over the last 12 months
- Cost of sales: $707.026 million (down from $837.292 million for the same quarter of the previous year)
- Cost of sales decreased by -15.6% over the last 12 months
- Net earnings: $52.086 million (up from $34.002 million for the same quarter of the previous year)
- Diluted income per share: $0.93 (up from $0.57 for the same quarter of the previous year)
- PE ratio of Worthington Industries: 11.7
- PE ratio of Worthington Industries: 11.7
- Diluted weighted-average shares outstanding: 55.094 million (down from 56.957 million for the same quarter of the previous year)
- Cash and cash equivalents: $72.260 million
- Cash and cash equivalents per share: $1.31
- Cash and cash equivalents makes up 3.01% of Worthington's market capital
- Cash and cash equivalents makes up 2.99% of Worthington's total assets
- Accounts receivable: $477.228 million
- Accounts receivable makes up 19.8% of Worthington's total assets
- Inventories: $379.787 million
- Inventories makes up 15.8% of Worthington's total assets
- Stockholders equity of Worthington: $958.743 million
- Stockholders equity per share: $17.40
- Worthington is trading at 2.5 times its stockholders equity which is within the expected range of between 2 and 4 which most companies tend to trade at.
Worthington Industries' management commentary on the results and earnings guidance
COLUMBUS, Ohio, Dec. 17, 2019 (GLOBE NEWSWIRE) -- Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $827.6 million and net earnings of $52.1 million, or $0.93 per diluted share, for its fiscal 2020 second quarter ended November 30, 2019. Net earnings for the current quarter benefited from a pre-tax gain of $23.1 million, or $0.33 per share, recorded in equity income related to the sale of the international operations of the WAVE joint venture. Estimated current quarter inventory holding losses in Steel Processing were $6.5 million, or $0.09 per share. In the second quarter of fiscal 2019, the Company reported net sales of $958.2 million and net earnings of $34.0 million, or $0.57 per diluted share. Estimated inventory holding gains of $0.8 million in the prior year quarter were largely offset by pre-tax restructuring charges of $0.4 million.
Balance Sheet
Total debt was down slightly from August 31, 2019 to $698.8 million and the Company had $72.3 million of cash on hand at quarter-end.
Quarterly Segment Results
Steel Processing’s net sales totaled $516.9 million, down 19%, or $118.1 million, from the comparable prior year quarter driven by lower average selling prices and lower direct volume, partially offset by higher toll volume. Operating income of $17.2 million was $7.8 million less than the prior year quarter due to the unfavorable impact of inventory holding losses and lower direct volume, partially offset by improved direct spreads and higher toll volume. The mix of direct versus toll tons processed was 49% to 51% in the current quarter, compared to 56% to 44% in the prior year quarter.
Pressure Cylinders’ net sales totaled $290.1 million, down 1%, or $4.3 million, from the comparable prior year quarter due to the impact of divestitures and lower volumes in the industrial products business, partially offset by higher volumes in both the consumer products and oil and gas equipment businesses. Operating income of $15.6 million was $0.9 million higher than the prior year quarter as the impact of higher volumes in consumer products and overall improvements in oil and gas equipment more than offset the unfavorable impact of lower volumes in the industrial products business.
Recent Developments
Outlook
“The Company is operating well, and we are optimistic about our momentum going forward,” McConnell said. “We believe most of our markets should remain steady but do anticipate continued weakness in Europe and will remain focused on driving future improvement through solid execution of our strategies.”
Total debt was down slightly from August 31, 2019 to $698.8 million and the Company had $72.3 million of cash on hand at quarter-end.
Quarterly Segment Results
Steel Processing’s net sales totaled $516.9 million, down 19%, or $118.1 million, from the comparable prior year quarter driven by lower average selling prices and lower direct volume, partially offset by higher toll volume. Operating income of $17.2 million was $7.8 million less than the prior year quarter due to the unfavorable impact of inventory holding losses and lower direct volume, partially offset by improved direct spreads and higher toll volume. The mix of direct versus toll tons processed was 49% to 51% in the current quarter, compared to 56% to 44% in the prior year quarter.
Pressure Cylinders’ net sales totaled $290.1 million, down 1%, or $4.3 million, from the comparable prior year quarter due to the impact of divestitures and lower volumes in the industrial products business, partially offset by higher volumes in both the consumer products and oil and gas equipment businesses. Operating income of $15.6 million was $0.9 million higher than the prior year quarter as the impact of higher volumes in consumer products and overall improvements in oil and gas equipment more than offset the unfavorable impact of lower volumes in the industrial products business.
Recent Developments
- On Sept. 30, 2019, WAVE completed the sale of its international operations to Knauf International GmbH resulting in a pre-tax gain of $23.1 million in equity income.
- On Oct. 7, 2019, the Company purchased the operating assets of Heidtman’s pickling and slitting facility in Cleveland, Ohio for $29.6 million.
- On Nov. 1, 2019, the Company contributed substantially all of the net assets of the former Engineered Cabs segment to a newly-formed company that simultaneously acquired another cabs manufacturer. In exchange for the contributed net assets, the Company received a 20% minority ownership interest in the new company.
Outlook
“The Company is operating well, and we are optimistic about our momentum going forward,” McConnell said. “We believe most of our markets should remain steady but do anticipate continued weakness in Europe and will remain focused on driving future improvement through solid execution of our strategies.”
Worthington Industries (NYSE: WOR) stock price history
The image below shows the stock price history of Worthington (NYSE: WOR) over the last 5 years. And it's been a very average time for Worthington (WOR). 5 years ago Worthington was trading around $30 a stock, and its currently it's trading at $43.50. That's a return of 45% provided to Worthington stockholders over the last 5 years.
The stock of Worthington Industries is trading at a lot closer to its 52 week high of $43.50 than it is to it 52 week low, which to us is a clear indication that the short term sentiment and momentum of Worthington's stock is positive.
The stock of Worthington Industries is trading at a lot closer to its 52 week high of $43.50 than it is to it 52 week low, which to us is a clear indication that the short term sentiment and momentum of Worthington's stock is positive.
Recent coverage of Worthington Industries (NYSE:WOR)
The extract below shows recent coverage of Worthington as obtained from Zacks
Worthington Industries (WOR - Free Report) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.58 per share. This compares to earnings of $0.58 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 18.97%. A quarter ago, it was expected that this metal manufacturer would post earnings of $0.72 per share when it actually produced earnings of $0.56, delivering a surprise of -22.22%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times. Worthington, which belongs to the Zacks Metal Products - Procurement and Fabrication industry, posted revenues of $827.64 million for the quarter ended November 2019, surpassing the Zacks Consensus Estimate by 5.23%. This compares to year-ago revenues of $958.23 million. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Worthington shares have added about 14.7% since the beginning of the year versus the S&P 500's gain of 27.3%.
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Worthington Industries (WOR - Free Report) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.58 per share. This compares to earnings of $0.58 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 18.97%. A quarter ago, it was expected that this metal manufacturer would post earnings of $0.72 per share when it actually produced earnings of $0.56, delivering a surprise of -22.22%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times. Worthington, which belongs to the Zacks Metal Products - Procurement and Fabrication industry, posted revenues of $827.64 million for the quarter ended November 2019, surpassing the Zacks Consensus Estimate by 5.23%. This compares to year-ago revenues of $958.23 million. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Worthington shares have added about 14.7% since the beginning of the year versus the S&P 500's gain of 27.3%.
Read the original article here
Worthington Industries' (NYSE: WOR) latest stock valuation
So based on the earnings report of Worthington (NYSE:WOR) what do we value Worthington (WOR) stock at? Based on their latest earnings report our valuation model provides a target price (full value price) for Worthington Industries at $41.40 a stock. We therefore believe the stock of Worthington is slightly overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $41.40 Therefore we believe the a good entry point into the stock of Worthington Industries is at $37.30 or below. We believe the stock of Worthington (WOR) will trade in a narrow range around its current price and our target price.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $41.40 Therefore we believe the a good entry point into the stock of Worthington Industries is at $37.30 or below. We believe the stock of Worthington (WOR) will trade in a narrow range around its current price and our target price.
Next earnings release of Worthington Industries
It is expected that Worthington Industries will release their 3rd quarter 2020 earnings report in early March 2020