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XPEL: On Its Way To $30 Per Share

Jun. 08, 2020 12:01 PM ETXPEL, Inc. (XPEL)19 Comments
Lukas Wolgram profile picture
Lukas Wolgram


  • XPEL's 2021 numbers are not priced into the stock.
  • There is significant room for multiple expansion when the market realizes what XPEL will likely achieve in 2021.
  • Valuation multiples and the stock price could double by the end this year.
  • I introduce a new form of content with this article, a YouTube commentary video.

While the market hits new highs (or at least the Nasdaq does), my single largest position remains off its own all-time highs by a few dollars per share. XPEL Inc. (NASDAQ:XPEL) trades at around 30 times my 2020 EPS estimate. My forecast has XPEL growing revenue 12% this year, with EPS coming in up slightly from 2019. A stock price of around 30 times this year's earnings seems reasonable enough, perhaps even high for a company growing revenue low double digits this year. But this year's earnings are, at this point, not important. What matters here are my 2021 forecasts, and why XPEL is set to see earnings explode in 2021, along with its stock price.

A Muted 2020 Could Lead To A Huge 2021

In the following video, I go over what has occurred over the last couple of years that now sets XPEL up for a big year in 2021. This includes my forecasts for the rest of 2020 and all of 2021.

As I explain in the video, XPEL saw a substantial decline in revenue in China in Q1 2020 due to COVID-19, but still managed to grow revenue nearly 15% overall, as the impact from the virus was fairly isolated to China in the first quarter. The second quarter of 2020 will likely see a more spread-out impact in western regions. I have forecasted a 10% decline in revenue for Q2 2020 from Q2 2019. Keep in mind though, China is expected to recover in Q2 as management suggested in the Q1 conference call that China's revenue was on pace to double from 2019 in the second quarter.

Source: Table created by author, XPEL Q1 2020 data from XPEL Filings

My 2020 Q3 and Q4 estimates bring growth to around 20%. This would be on the historically

This article was written by

Lukas Wolgram profile picture
Check out my FREE substack newsletter Uncommon Profits here: https://lukewolgram.substack.com . Ranked #1 on Tip Ranks top 25 financial bloggers for accuracy as of January 1, 2021. I focus mostly on high quality small and microcap companies that I believe can double their stock price within 3 years (26% hurdle rate).

Analyst’s Disclosure: I am/we are long XPEL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I own XPEL shares and calls. It is my single largest position and makes up a majority of my net worth.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (19)

Lukas Wolgram profile picture
Hey everyone, I've started a paid substack newsletter service called "Uncommon Profits" covering some of my favourite stocks in more depth (it's just $6 USD per month)! Xpel is one of the companies I'll be covering there! Consider checking it in the link in my Seeking Alpha profile at the top right, or send me a message and I can send you a direct link! Thanks for following/reading my articles!
Yuri Mayorov profile picture
On Aug 18-19 XPEL disclosed that its Chairman/CEO and 3 directors will be selling up to 1.4 million of shares, equivalent to ~$34mn as per current share price, i.e. a substantial volume given the company size/market cap. Looks like the management believes that the stock has overshoot its reasonable valuation.
barryb1986 profile picture
Or it could be they want to take some profit having not sold a single share since their initial purchases :-)
Yuri Mayorov profile picture
@barryb1986 well, both hypotheses can be true simultaneously.
barryb1986 profile picture
@Yuri_M agree 100%. Knowing the CEO and his passion for the business, and having spoken to him, my bet is that he simply wants to reap some of the profits he earned since taking the company from the brink of BK to its current state. Even w/ selling 5% of his stake, nearly all his net worth w/ be in Xpel stock. Still a good long term bet IMO.
Yuri Mayorov profile picture
@Lukas Wolgram Lukas, thanks for sharing this idea! Made some quick profits (+20%) yesterday buying right before Q2 results, apparently sold too early :) What's your current view on intrinsic value taking into consideration 1H 2020 results?
Gino Verza profile picture
@Lukas Wolgram. Congratulations Lukas; you saw it coming......

In my message below, I did not believe you, I was wrong. The stock price, as you said, appreciate quite rapidly. My bad. Missed greater returns.

I hold XPEL. Happy to be wrong. Congratulations again.
ChrisForte profile picture
Props Lukas, simply props! Great call.
sincerequest profile picture
@Lukas Wolgram Great article. A few questions for you.
How are they able to grow so fast in Europe? Who are they taking market share from? Are there alternatives to XPEL for high end cars?
Also, high level, how are they able to enter new countries and grow business so quickly? I imagine they likely have to hire sales people who go around to dealerships selling their product, no?
Lukas Wolgram profile picture
As per conference calls, Xpel is growing the market overall more than taking market share. I think Xpel is the company gaining most of the new business in the industry. The main alternatives to Xpel are films from 3M and SunTek. Xpel's advantage is not in the film itself, the film is very similar across the three companies. It is Xpel's patented software that nests patterns inside the film saving installers substantial film and thus money that really sets Xpel apart.

As for growing so quickly, I think it's a combination of hiring good salespeople for new regions (recently they've done very well with their sales team in Mexico) and being the most attractive film due to Xpel's superior software for installers. It's also the fact that Xpel is still tiny in regions like Europe where the potential (not necessarily current existing) market is massive (EU is probably atleast 10X the market that Canada is, yet Xpel still sells nearly double in Canada what they do in Europe, I expect Europe to surpass Canada sales by many multiples).
Your article totally uninformative to what this Company does and why either it has prospects or there are prospects in its market sector open to it
Lukas Wolgram profile picture
Consider checking out my previous articles for this :)
Gino Verza profile picture
Thank you Lukas. I enjoy your articles very much; I am a follower. I have also held XPEL for quite a while now and plan to continue doing so. I would say it is a core holding in my portfolio. I join in your enthusiasm --XPEL is a great company with great management. However, my figures going forward are much more modest than the projections you present. Thank you.
Lukas Wolgram profile picture
Fair enough, I always stress that people should use their own projections rather than relying on mine. I appreciate the support!
The market pinball wizard service (they are the best I’ve ever found) has this topping and then going down hard in a C wave. Shorting soon
Lukas Wolgram profile picture
And do they have any fundamental reason to think this or are they attempting to use voodoo magic to predict such carnage?
Lazy Raccoon profile picture
I’m on board!
I'm with you and only regret not buying more shares at 8.69. Looking forward to the next few months.
Hoping xebec has equal growth!
I_JUNGLE_BOY profile picture
hindsight 20/10 my friend...if i only knew the lottery #'s yesterday i woulda played them
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