At the current price of $212, what is the market’s view of Valmont Industries’ future operating performance? Valmont Industries’ common shares will need to reach $356 to achieve average annual stock market performance of 9.0% over the next 6 years. To achieve Upper quartile performance, Valmont Industries’ stock price will need to reach $419 by 2029.
Executive Summary
- Price Target Research identifies Valmont Industries as having: above average financial strength, instability, low profitability, and very low expected growth.
- Very high valuation, lagging shareholder returns. Current valuation levels are very high relative to the Valmont Industries Peer Group. Recent market returns have substantially underperformed the Valmont Industries Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Valmont Industries shares should reach a level of $125 by 2029 — an -7.0% per year total shareholder return. A 2029 stock price of $356 would reflect median performance and a price of $419 would be required to reach upper quartile performance.
- Valmont Industries’ achieved growth is average. Historical growth has been average relative to the Valmont Industries Peer Group and forecasted growth is relatively very low. Revenue Growth has been superior. Equity Growth has lagged. Valmont Industries’ historical income statement growth has been higher than growth in the balance sheet. Revenue growth has exceeded asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. Valmont Industries’ consensus growth expectations are lower than historical growth.
- Asset Turnover is group leading. Pretax Margin is group lagging. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- Valmont Industries’ risk profile is unfavorable. Overall variability has been above average with above average revenue variability, above average E.P.S. variability, and only average stock price volatility. Financial Strength is relatively high and earnings’ expectations are only average. The debt/capital ratio has risen very significantly.
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