Simpson Manufacturing: Margin Guidance And Recent Dip Present Opportunity

Integrated Housing
43 Followers

Summary

  • Q2 earnings call revealed upward revision of operating margin guidance for FY '22; still will see sequential margin decline throughout remainder of year.
  • Target percentage of free cash flow returned to shareholders has been decreased as a result of intake of debt to fund ETANCO acquisition; balance sheet still strong and dividend remains reliable.
  • Fully integrated three-statement and DCF model suggest an intrinsic value of $116.45, representing 13% upside.

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Introduction

Simpson Manufacturing (NYSE:SSD) is beginning to see contracting margins as a result of higher priced inventory catching up with previously implemented price increases. However, this news is no surprise. Even with this decrease looming, the stock has significant value on the backing

This article was written by

43 Followers
I have a strong interest in all aspects of the housing market supply chain and the companies it consists of. My goal is to analyze multiple levels of this supply chain to help myself and others gain a broad understanding of the many moving parts that go into the housing machine.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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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