At the current price of $23, what are market expectations regarding CompX International’s future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, CompX International shares will need to reach $39. Upper quartile performance will require a $45 CompX International stock price by 2029.
Executive Summary
- Key CompX International characteristics: high financial strength, high profitability, stability, and above average expected growth.
- High valuation, leading shareholder returns. Current valuation levels are high relative to the CompX International Peer Group. Recent market returns have significantly outperformed the CompX International Peer Group. Total shareholder returns expected to equal the overall equity market. Based on current investor expectations, CompX International shares should reach a level of $28 by 2029 — an 8.5% per year total shareholder return. A 2029 stock price of $39 would reflect median performance and a price of $45 would be required to reach upper quartile performance.
- CompX International’s past growth is slightly below average. Historical growth has been below average relative to the CompX International Peer Group and forecasted growth is relatively high. EPS Growth has been superior. This factor has buoyed market perceptions of CompX International. CompX International’s 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.
- Asset Turnover, Pretax Margin, Pretax ROA, and Return on Equity are all group leading. These factors have strengthened market perceptions of CompX International. The company has high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- CompX International’s risk profile is neutral. Overall variability has been above average with above average revenue variability, relatively low E.P.S. variability, and relatively low stock price volatility. Financial Strength is relatively very high and earnings’ expectations are unavailable. The debt/capital ratio is unavailable.
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