Atkore shares target cut, market perform rating on earnings miss, guidance cut

EditorNatashya Angelica
Published 11/22/2024, 07:50 AM
ATKR
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On Friday, RBC Capital Markets adjusted its outlook on shares of Atkore International Group Inc . (NYSE: NYSE:ATKR), a leading manufacturer of electrical, safety, and infrastructure solutions. The firm's analyst revised the price target downwards to $93.00 from the previous $99.00 while maintaining a Sector Perform rating on the company's shares.

The revision follows Atkore's recent announcement of an operating miss by $0.11, which is approximately 4%, and a significant reduction in its forecasted EBITDA for fiscal year 2025 by 23%.

This downward adjustment was prompted by a series of challenges, including the emergence of a new competitor in the PVC conduit market, increased import pressures affecting both PVC and steel conduit products, and ongoing inefficiencies at the company's Hobart facility. Moreover, there is an expectation that price normalization may extend into fiscal year 2026.

Despite the lowered EBITDA guidance for 2025, which is set 28% below the consensus, Atkore's stock price has shown some resilience. This suggests that investors may see a potential bottom forming for the company's shares.

The analyst noted that while there are several possible positive catalysts on the horizon for Atkore, the recommendation is to wait for a quarter with clean and as-expected financial results before reassessing the company's performance.

The recent developments at Atkore reflect the dynamic and challenging environment in which the company operates. As Atkore navigates through these headwinds, the market's response will continue to be a key indicator of investor sentiment and the company's future prospects.

In other recent news, Atkore International Group Inc. reported mixed financial results for Q4 of FY2024. The company's net sales reached $3.2 billion, with adjusted earnings per share at $14.48, and adjusted EBITDA of $772 million. These figures did not meet the expectations of B.Riley, leading to a downgrade of the company's stock from Buy to Neutral.

The firm highlighted several factors impacting the industry, including the uncertainty surrounding new capacity entering the market, competition from steel product imports, and persistent pricing pressures.

Despite these challenges, Atkore has initiated growth strategies and remains committed to shareholder returns. For FY2025, the company anticipates net sales between $2.9 billion and $3.2 billion, with adjusted EBITDA projected to be between $475 million and $525 million.

Strategic growth areas include solar torque tubes, water-related products, global mega projects, and regional service centers. Atkore has also repurchased over $1.3 billion in stock and introduced a quarterly cash dividend. These recent developments demonstrate the company's efforts to navigate market shifts and maintain growth.

InvestingPro Insights

To provide additional context to Atkore International Group Inc.'s current situation, let's examine some key financial metrics and insights from InvestingPro.

Despite the challenges outlined in the article, Atkore's financial fundamentals remain relatively strong. The company's P/E Ratio (Adjusted) stands at 5.57, indicating that the stock might be undervalued compared to its earnings. This low valuation is further supported by an InvestingPro Tip suggesting that Atkore is "trading at a low earnings multiple."

However, the company's recent performance aligns with the analyst's concerns. InvestingPro Data shows a Revenue Growth of -10.72% over the last twelve months, corroborating the challenges mentioned in the article. An InvestingPro Tip also notes that "analysts anticipate sales decline in the current year," which is consistent with the reduced EBITDA forecast discussed.

On a positive note, Atkore's management appears to be taking proactive steps. An InvestingPro Tip reveals that "management has been aggressively buying back shares," which could be seen as a sign of confidence in the company's long-term prospects despite current headwinds.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Atkore, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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