On Wednesday, Standex International (NYSE: NYSE:SXI) received an updated price target from an analyst at DA Davidson. The new target is set at $222.00, an increase from the previous target of $211.00. The firm has reiterated its Buy rating on the stock. This adjustment follows Standex International's first quarter fiscal year 2025 earnings, which also corresponds to the third quarter of calendar year 2024.
In the wake of the company's earnings report, the analyst noted that while Standex International continues to face some organic growth challenges similar to the previous quarter, particularly with delayed launches in its Engraving segment, these issues were largely overshadowed by the recent acquisition of Amran/Narayan.
This specialty transformer company has demonstrated a compound annual growth rate (CAGR) of 30% over the past three years and boasts EBITDA margins exceeding 40%.
The acquisition, which is the largest in Standex International's history, was secured at just over 10 times the EBITDA, which the analyst considers reasonable given the rapid growth trajectory of the business. The deal is seen as a testament to Standex International's expertise in mergers and acquisitions.
The analyst's commentary highlighted the significance of the acquisition, "The price of just over 10x EBITDA (trailing—the business is still rapidly growing) seems reasonable. The deal is the largest in SXI's history. We view it as yet another example of SXI's M&A prowess—we're still recommending the stock."
Standex International's strategic move to acquire Amran/Narayan appears to be a key factor in the analyst's continued support for the stock. With the new price target in place, the firm maintains a positive outlook for Standex International's performance in the market.
In other recent news, Standex's shareholders have also approved an amendment granting the Board of Directors the authority to determine the number of directors within a set range, and the company's 2018 Omnibus Incentive Plan was amended to include 450,000 additional shares.
Despite a decrease in sales, Standex reported a record profit and cash generation for fiscal 2024 and increased its quarterly cash dividend by 6.7% to $0.32 per share. The company's Engineering Technologies segment saw a 15.7% increase in revenue.
Standex also reaffirmed its long-term financial outlook for fiscal year 2028, targeting high single-digit organic growth and improved profitability metrics. These are recent developments from Standex, which concluded its fiscal fourth quarter with $347 million in available liquidity and a net cash position of $5.3 million.
InvestingPro Insights
Standex International's recent acquisition and positive analyst outlook are further supported by data from InvestingPro. The company's market cap stands at $2.17 billion, reflecting its substantial presence in the industry.
InvestingPro Tips highlight Standex's strong dividend history, noting that the company "has raised its dividend for 14 consecutive years" and "has maintained dividend payments for 54 consecutive years." This aligns with the recent 6.7% increase in quarterly cash dividend mentioned in the article, underscoring the company's commitment to shareholder returns.
The company's financial health appears robust, with InvestingPro data showing a P/E ratio of 29.26 and a revenue of $720.63 million over the last twelve months as of Q4 2024. Additionally, an InvestingPro Tip indicates that "cash flows can sufficiently cover interest payments," which is particularly relevant given the recent large acquisition and associated financing.
Standex's profitability is also noteworthy, with an operating income margin of 15.58% over the last twelve months. This solid performance supports the analyst's positive view and the company's ambitious growth targets.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Standex International, providing deeper insights into the company's financial position and market performance.
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