Gibraltar Industries: This Rock Is Sturdier Than The Recent Stock Decline And Valuation Suggests
John Leonard, CFA • Mon, Oct. 13
- The lowered guidance due to weak end-market demand for repair and remodeling is more than reflected in the 7.7x EBITDA multiple and ~20% stock decline.
- Steady FCF helped reduce the net leverage ratio by >50% since 2010; a 2013 refinancing reduced the interest rate by 175 bps and extended the maturity from 2015 to 2021.
- A 100-150 bp EBITDA margin improvement is possible with steady top line growth, a rebound in gross margins and continued aggressive management of SG&A expenses.
- A string of acquisitions/divestitures shifted the focus to value-added products in faster growing markets and generated significant cash proceeds.
- The company is highly levered to an eventual recovery as >80% of its revenue is from products that are #1 or #2 in their markets.