On Monday, Stifel reiterated its Buy rating on Hillman Solutions Corp (NASDAQ:HLMN) with a steady price target of $16.00. The firm highlighted the company's recent acquisition of Intex DIY, a significant player in the cleaning textile market, as a strategic move to diversify into new product categories. This purchase aligns with Hillman Solutions' growth strategy to broaden its offerings in areas where it can effectively utilize its established customer base, sales team, and distribution channels.
The acquisition is expected to enhance Hillman Solutions' market presence by tapping into Intex DIY's substantial annual revenue, which is forecasted to reach $55 million in fiscal year 2024. Intex DIY's client roster includes prominent retailers such as Home Depot (NYSE:HD), Lowes, Walmart (NYSE:WMT), Sherwin-Williams (NYSE:SHW), and Dollar General (NYSE:DG), indicating a solid footprint in the retail sector.
Stifel's analysis suggests that the initial pre-synergy Adjusted EBITDA (AEBITDA) margins for the acquisition are estimated at 9%. The purchase price multiple is calculated to be between 5.0x and 6.0x, with an estimated midpoint of $27.5 million. This financial perspective underscores the firm's confidence in the value that the Intex DIY acquisition adds to Hillman Solutions.
Hillman Solutions' stock price stood at $9.75 at the time of the analyst's commentary. The company's strategic expansion through mergers and acquisitions is expected to bolster its position in the market and enhance shareholder value.
The affirmation of the Buy rating and price target reflects Stifel's positive outlook on Hillman Solutions' potential for growth and profitability following its latest acquisition, as it continues to implement its merger and acquisition strategy.
In other recent news, Hillman Solutions Corp. has made significant strides in its operations and strategic moves. The company announced the acquisition of Intex DIY, Inc., a leading supplier of cleaning textiles, aiming to expand its Protective Solutions business. This acquisition aligns with Hillman's growth strategy and is expected to bolster its product offerings in the cleaning sector.
In financial news, Hillman reported a strong second quarter of 2024, with an 18% increase in adjusted EBITDA, surpassing expectations. The company raised its full-year adjusted EBITDA guidance, although it revised net sales expectations due to market conditions. Hillman also announced a succession plan, with a new CEO set to take over in January 2025.
Hillman's Retail Display Systems (RDS) business is projected to grow, with plans to have 1,200 machines by year-end. Despite a decrease in net sales in the second quarter compared to the previous year, free cash flow improved significantly in the first half of the year.
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