Myers Industries, Inc.

MYE Details

Myers Industries, Inc. (NYSE: MYE) is a plastic and rubber products manufacturer, designer, and marketer serving industrial, agricultural, automotive, and consumer industries. The company generates its revenue through two segments; namely, 1) Material Handling, which produces a broad range of products for the US and Canadian markets, including reusable plastic containers, pallets, bulk shipping containers, automotive parts, and other allied products, and 2) Distribution, which distributes tools and supplies for the tire servicing and automotive industries. As of October 01, 2021, the company's market capitalization stood at USD 707.92 million.

Quarterly Dividends: MYE announced a quarterly cash dividend of USD 0.135 per common share on September 02, 2021. The dividends will be paid on October 04, 2021, to shareholders of record as of September 13, 2021.

Strategic Initiatives: MYE announced its new brand identity on August 04, 2021, with the goal of better representing the company's complete services and value to consumers. MYE changed its master brand, logo, and website, which reflect its transition towards its "One Myers" strategic goal that aims to exploit its unique position, broad suite of technologies, and deep plastics expertise.

Previously, on August 02, 2021, the company announced that it purchased the assets of Trilogy Plastics, a world-class bespoke rotational molder. MYE utilized its revolving credit facility to fund the transaction. It anticipates growth synergies as a result of the merged rotational molding firms' expanded global reach.

H1FY21 Results: The company reported a massive increase of 50.35% in net sales to USD 361.80 million during H1FY21 (ended June 30, 2021) compared to USD 240.64 million during H1FY20, due to higher volume and incremental sales from Elkhart Plastics, acquired on November 10, 2020. However, its net income declined to USD 18.38 million during H1FY21 from USD 25.09 million reported in H1FY20, primarily due to increased selling, general and administrative (SG&A) expenses. As of June 30, 2021, the company had cash and cash equivalents of USD 13.54 million, with total debt (including finance lease obligation) of USD 68.01 million.

Key Risks: Resins, colorants, and natural and synthetic rubber are among the primary raw materials used by the company. The firm has seen instances of significant rises in resin costs during the last few years. Such gyrations in raw material costs may significantly impact the company's top line and profitability.

Outlook:

FY21 Guidance (Source: Earnings Presentation, August 05, 2021)

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

MYE Daily Technical Chart (Source: REFINITIV) 

Stock Recommendation: MYE's share price has fallen 11.53% in the past month and is currently at the mid-point of the 52-week range of USD 13.04 to USD 23.98. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 41.89. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 24.00. Considering the current trading levels, robust growth in topline, strategic programs, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 20.11, up 2.76% as of October 01, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.