Valuation Scorecard: Stock Rating D-Negative (2/27/24)-Rogers Corp. (ROG).

To achieve average annual stock market performance of 9.0% over the next 6 years, Rogers shares will need to reach $195. To achieve Upper quartile performance, Rogers’ stock price will need to reach $229 by 2028. As reflected at the current price of $116, what future Rogers operating performance is the market anticipating?

Executive Summary

• Key Rogers characteristics: stability, below average financial strength, below average expected growth, and low profitability.
• Low valuation, lagging shareholder returns. Current valuation levels are below average relative to the Rogers Peer Group. Recent market returns have substantially underperformed the Rogers Peer Group. Total shareholder returns expected to seriously lag the overall equity market. Based on current investor expectations, Rogers shares should reach a level of $169 by 2028 — an 6.4% per year total shareholder return. A 2028 stock price of $195 would reflect median performance and a price of $229 would be required to reach upper quartile performance.
• Rogers’ past growth is slightly below average. Historical growth has been below average relative to the Rogers Peer Group and forecasted growth is relatively below average. Revenue Growth has lagged. This factor has negatively affected market perceptions of Rogers. Rogers’ historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. Rogers’ consensus growth expectations are lower than historical growth.
• Asset Turnover, Pretax Margin, and Return on Equity are group lagging. These factors have negatively affected market perceptions of Rogers. The company has very low cash and will have to work to generate attractive investments and improve valuation.
• Rogers’ risk profile is neutral. Overall variability has been relatively low with relatively low revenue variability, very high E.P.S. variability, and very low stock price volatility. Financial Strength is below average and earnings’ expectations are below average. The debt/capital ratio has been relatively steady.

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