Worthington Enterprises, Inc. (WOR) is set to disclose its third-quarter earnings on March 20, 2024 after market closes. Street expects the company to report an EPS and revenue of $0.69 and $323.44 million in the to-be-reported quarter. The company reported robust performance in the previous quarter and surpassed its consensus EPS and revenue estimates.
Moreover, looking back over the past three years, WOR has demonstrated impressive financial performance. During this period, its revenue has grown at a CAGR of 18%. Besides, both its EBIT and EBITDA have experienced remarkable growth, with CAGRs of 24.4% and 18.5%, respectively, underscoring the company's sustained profitability and operational efficiency over the same timeframe.
In the United States, increased construction activities in both residential and commercial sectors, along with growing investments in infrastructure, are boosting demand for steel. The expanding automotive industry, coupled with the rise in energy exploration, further contributes to market growth.
As a result, the U.S. steel market is projected to grow at a CAGR of 1.8% by 2032. On a global scale, the market is likely to expand at a CAGR of 3.3% until 2032.
Further, shares of WOR have gained 95.7% over the past year and 48.4% over the past six months, closing the last trading session at $62.89. Moreover, the stock is currently trading above its 50-day and 200-day moving averages of $59.36 and $47.47, indicating an uptrend.
Below are the essential elements of WOR that might have an impact on it in the foreseeable future:
Expanding Outdoor Culinary Offerings
In February, WOR announced the addition of HALO™-branded pizza ovens, pellet grills, griddles, and accessories to its outdoor living product lineup. With this, the company intends to meet the growing consumer demand for enhancing outdoor experiences with high-quality food.
Moreover, WOR is also acquiring an 80% ownership stake in an affiliate of HALO Products Group.
Robust Financials
During the third quarter of fiscal 2024, which ended November 30, 2023, WOR generated net sales of $1.09 billion. Its non-GAAP operating income came in at $16.03 million, compared to an operating loss of $1.53 million in the previous year’s quarter. Its non-GAAP EBIT rose 87.3% year-over-year to $54.54 million.
Moreover, net earnings attributable to controlling interest grew 78.5% and 77.3% from the previous-year quarter to $38.88 million and $0.78 per share.
Further, as of November 30, 2023, the company’s total debt was $623.8 million, down $69 million from May 31, 2023,
Healthy Dividend Policy
On December 19, WOR declared a quarterly dividend of $0.16 per share, payable on March 29, 2024.
The company pays an annual dividend of $0.64, which yields 1.02% on the prevailing price level, compared to a four-year average dividend yield of 2.07%. It has raised its dividend payouts at a CAGR of 6.9% over the past three years. Moreover, the company has consistently raised its dividend payments for the past nine years.
Impressive Profitability
The stock’s trailing-12-month net income margin of 6.43% is 36.2% higher than the 4.72% industry average. Its trailing-12-month ROCE and ROTA of 17.94% and 8.28% are 55.9% and 96.8% higher than the industry averages of 11.51% and 4.21%.
Moreover, the company’s trailing-12-month asset turnover ratio of 1.32x is 33% higher than the 0.99x industry average.
Discounted Valuation
WOR’s trailing-12-month non-GAAP P/E multiple of 9.50 is 35.4% lower than the industry average of 14.70. Its trailing-12-month EV/Sales of 0.77x is 39.2% lower than the industry average of 1.27x.
POWR Ratings Exhibit Rosy Prospects
WOR’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. WOR holds a B grade for Momentum, which is in line with its impressive price performance.
The stock also earns a B grade for Quality, which is consistent with its impressive profitability metrics.
WOR is ranked #17 out of 30 within the A-rated Steel industry.
Click here to access WOR’s Value, Momentum, Stability, and Sentiment ratings.
Bottom Line
With the recent announcement of the addition of HALO™-branded outdoor culinary products to its portfolio and the acquisition of a significant stake in a HALO affiliate, WOR is poised to capitalize on the growing demand for high-quality outdoor experiences.
Moreover, the stock also indicates an uptrend currently, reflecting investor confidence.
Additionally, its robust financial performance, highlighted by strong revenue growth and improved profitability metrics, further solidifies its position in the market. Further, its healthy dividend policy and discounted valuation make the stock an ideal buy right now.
How Does Worthington Enterprises, Inc. (WOR) Stack Up Against Its Peers?
While WOR has an overall grade of B, equating to a Buy rating, you may check out these A (Strong Buy) rated stocks within the Steel industry:
TERNIUM S.A. ADR (TX)
Companhia Siderurgica Nacional S.A. (SID)
SSAB AB ADR (SSAAY)
To explore more Steel stocks, click here.
What To Do Next?
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WOR shares were trading at $62.57 per share on Wednesday morning, down $0.32 (-0.51%). Year-to-date, WOR has gained 9.00%, versus a 8.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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