Virco: The Wind Of Fortune Is Blowing In Its Favor

Hong Chew Eu
1.19K Followers
(16min)

Summary

  • Virco benefited from the post-Covid-19 supply chain changes, leveraging extreme seasonality and the Price/Cube Threshold for competitive advantage in the US school furniture market.
  • Despite average financial standing, Virco's recent revenue growth and profitability outpace peers. But these were driven by external supply chain factors rather than internal efficiencies.
  • With a 40% margin of safety, Virco's current competitive position makes it a viable investment opportunity, with potential for transformation if operational efficiencies improve.

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Investment Thesis

Virco Manufacturing Corp. (NASDAQ:VIRC) is benefiting from the change in the supply-chain picture post-Covid-19. Two characteristics of the US school purchasing process - extreme seasonality and high Price/Cube Threshold - have given it a moat.

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This article was written by

1.19K Followers
BSc (Eng), MBA. Self-taught value investor with 2 decades of investing experience. Blogger at i4value.asia. The blog is on value investing through case studies where I analyze and value listed companies in the ASEAN and US regions. I have an exceptional perspective having served as a Board member of a Malaysia listed company for several decades. I have value investing book "Do you really want to master value investing?" on Amazon

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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