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Book Profits on These NASDAQ-Listed Consumer Discretionary Stocks – PATK, MCFT

Jan 04, 2022 | Team Kalkine
Book Profits on These NASDAQ-Listed Consumer Discretionary Stocks – PATK, MCFT

Patrick Industries, Inc.

PATK Details

Patrick Industries, Inc. (NASDAQ: PATK) is a leading manufacturer and distributor of component and building products and materials, with a focus on the recreational vehicle (RV), marine, manufactured home (MH), and industrial industries. Depending on the sort of product, manufacturing and distribution are the two segments of the company.

Latest News:

  • Offering of Senior Notes: On December 07, 2021 PATK priced its private offering of USD 225 million of aggregate principal amount of its convertible senior notes due 2028. The company expects to receive approximately USD 217 million in net proceeds from the sale of the Notes to the initial purchasers on December 13, 2021, subject to customary closing conditions.

9MFY21 Results:

  • Upsurge in Topline: PATK's net sales climbed by 70.98% to USD 2.93 billion during 9MFY21 (ended September 26, 2021), compared to USD 1.71 billion during 9MFY20 (ended September 27, 2020), due to significant and sustained performance in its RV and marine leisure lifestyle segments, as well as the MH and industrial end markets.
  • Improvement in Bottomline: Its net income was USD 163.90 million during 9MFY21, compared to USD 59.24 million during 9MFY20.
  • Leveraged Balance Sheet: The company exited the quarter with a cash balance of USD 44.88 million and a total debt of USD 1.09 billion.

Key Risks:

  • Customer Concentration Risk: Two clients in the RV sector accounted for 39% of the company's total revenues in FY20. As a result, the loss of either of these customers could have a detrimental impact on the company's finances.
  • Product Concentration Risk: The RV industry accounted for 56% of net sales in FY20 and 55% in FY19, respectively. Any large decline in RV unit shipments or a halt of the industry's growth could have a detrimental impact on the company's financials and cash flows.

Valuation Methodology: EV/EBITDA 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.