Franchise Business; 12.4x P/E, 21% CAGR in 5-year EPS
Miller (NYSE:MLR) is the No. 1 world leader of towing and recovery equipment, with the largest distribution network in the industry. With a solid business franchise, Miller has been constantly innovating and trying to re-invent the wheel, introducing the Century M100 [the largest tow truck of its kind] in FY2019. The company’s moat lies in its dominating market share. Aside from its strong business credentials, the company has been deleveraging its balance sheet and recently attained a debt-free status, with rising net cash. This company is a P/E trade, boasting exceedingly low multiples [on our normalized FY2022 estimates trading at 12.4x] relative to the underlying market, and it is also an under-covered gem. Please see our attached financial model at the end of this report for our estimates and for your reference.
The company hit record EPS in FY2019, before being hit by Covid-19, with a 10.6% CAGR in revenues and 21.2% CAGR in diluted EPS over a 5-year period through 2019. We see a recovery in the cards by fiscal year 2022, and the company should inch closer to its prior record earnings level, leading to gains in the stock price. Overall, with a franchise business, undervalued metrics, and decent cash on the books, Miller is a recovery play with 60% total return potential.
World Leader in Towing and Recovery; Public For 27 Years
Miller is the world’s largest manufacturer of towing and recovery equipment. They make bodies for light- and heavy-duty wreckers, along with car carriers and multi-vehicles trailers. Products are sold and serviced through the industry’s largest distribution network. Miller has adopted the strategy of acquiring several of the most well-recognized brands in towing and recovery equipment manufacturing industry. The company has domestic manufacturing subsidiaries in Tennessee and Pennsylvania, and foreign manufacturing subsidiaries in France
