Canaccord Genuity has maintained its Hold rating on shares of Worthington Industries (NYSE:WOR), with a steady price target of $46.00.
The firm's decision comes after reviewing the company's internal reorganization, which involved moving the 20# gas grill cylinder product from the Consumer Products segment to the Building Products segment.
The analytical review by Canaccord Genuity indicated that this shift in product categorization would not significantly alter the financial projections for Worthington Industries.
The firm's forecasts for fiscal year 2025, including sales of $1.12 billion, as well as the adjusted EBITDA and EPS, remain consistent with previous estimates.
Canaccord Genuity's price target is derived from a multiple of 11 times the estimated earnings for 2025, which is in line with a discounted cash flow analysis. This valuation is slightly below the median trading multiple of 12 times the next twelve months' EV/EBITDA for Worthington's peers. The firm noted that at this time, there is no compelling argument for Worthington Industries to trade at a premium to its peer group.
In other recent news, Worthington Enterprises reported a downturn in its Q1 fiscal 2025 performance, with consolidated net sales falling by 17.5% to $257 million, and adjusted EBITDA and earnings per share dropping to $48 million and $0.50, respectively.
Canaccord Genuity subsequently lowered its price target for the company from $52.00 to $46.00, while maintaining a 'Hold' rating. This followed a sales drop that was 11% below Canaccord's estimates and 13% under the consensus, with the Consumer Products division notably underperforming. However, the Building Products segment exceeded expectations, registering sales approximately 2% higher than anticipated.
In the face of these challenges, Worthington Enterprises initiated a modernization project in Chilton, Wisconsin, and declared a dividend of $0.17 per share. Management remains optimistic about long-term growth, particularly in the commercial sector, and is focusing on mergers and acquisitions and share buybacks as part of their capital allocation strategy.
Despite concerns over consumer spending amid rising food costs, the company's balance sheet remains strong, with a net debt to trailing EBITDA ratio of approximately 0.5, indicating financial stability.
InvestingPro Insights
Adding to Canaccord Genuity's analysis, recent data from InvestingPro provides further context on Worthington Industries' financial position. The company's market capitalization stands at $2.06 billion, with a P/E ratio of 52.28, suggesting a relatively high valuation compared to earnings. This aligns with one of the InvestingPro Tips, which notes that WOR is "Trading at a high earnings multiple."
Despite the high valuation, Worthington Industries has shown resilience in its dividend policy. An InvestingPro Tip highlights that the company "Has maintained dividend payments for 52 consecutive years," demonstrating a strong commitment to shareholder returns. The current dividend yield is 1.66%, which may appeal to income-focused investors.
It's worth noting that while Canaccord Genuity maintains a Hold rating, InvestingPro data shows a 6-month price total return of -31.24%, indicating recent market challenges. This performance is reflected in another InvestingPro Tip stating that the "Stock has taken a big hit over the last six months."
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Worthington Industries, providing a deeper understanding of the company's financial health and market position.
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