John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Production Slowdown At Taylor Devices Is A Blessing In Disguise

Key takeaways

    Taylor Devices (NASDAQ:TAYD) is a hidden value play as lower production due to recent renovations results in a temporary decline in EBITDA, which distorts the valuation. The lack of analyst coverage (and general investor following) means there is no one besides management to explain that this renovation is a net positive. As a result, the stock is left to the mercy of investors focused on sharp (but one-off) top and bottom line declines. Going forward, the combination of a production rebound, return to a normal capex run rate and new orders should drive a significant rebound in EBITDA and free cash flow. The downside is limited by the strong, debt free balance sheet and diverse revenue ...
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