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Park Aerospace: Buying At The Top Hurts

May 16, 2023 5:26 AM ETPark Aerospace Corp. (PKE)EADSF, EADSY, KTOS2 Comments


  • Park Aerospace results sank as late shipments spiraled.
  • Upside for PKE stock in the near term is limited due to the special dividend that is quite high as compared to their cash flows.
  • Long-term, this is a stock that should have a lot of potential.
  • Looking for a helping hand in the market? Members of The Aerospace Forum get exclusive ideas and guidance to navigate any climate. Learn More »

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I’ve covered Park Aerospace (NYSE:PKE) various times by now and I would say compared to the market performance, Park Aerospace had an outsized return. While I like the return it has brought investors, at times I

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This article was written by

Dhierin Bechai profile picture

Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.

Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EADSF either through stock ownership, options, or other derivatives. 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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Comments (2)

I expect to see Shore step away from CEO role within a year. Would not be surprised at all to see dividend eliminated and certainly no more specials.
I am a very bad stock picker. But I understand what it takes to run an aero parts company. Presently, it is a good time to build commercial Parts. Order books are full. The trend however is going to be either rough or fabulous for Aero Parts makers in a couple of years, possibly sooner.
Post Covid’s order destruction and malaise in the materials and labor markets threw the Supply Chain into chaos. Delivery metrics sank.
OEMs (both Airframe and Engine) went from Supplier Rationalization mode to a “get parts at any cost” one.
The PE owned suppliers naturally raised prices while the OEMs were on the ropes for Parts and cash.
It stands to reason that the current dynamic will change soon. The healthy PE-owned Parts makers will soon embark on the Great Rollup 2.0 with the goal of collecting “content”… building (controlling) more higher assemblies, etc. They will get super competitive on Parts pricing with the OEMs who seek both pricing and cash flow (extended payment terms) relief.
The Rollup winners will then go public and the patient early investors will finally reap a reward.
The OEMs will achieve cost savings and ultimately a smaller Supply Chain. Once the OEMs achieve a smaller Supplier population they will live their long term dream of shrinking their massive Army of purchasing heads.
When I review these publicly traded (or PE owned) suppliers I ask myself:
1) are they going to be a leader in the Great Rollup 2.0?
2) are they going to get purchased by the bigger firms buying the smaller firms that build strategic content with A+ processes ?
3) are they going get creamed over time because their pricing is too high and processes too fat.
2025 will be an interesting acquisition year esp if interest rates decrease. There will be lots of Supplier fallout and happier OEMs.
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