Albany International Corp.

AIN Details

Albany International Corp. (NYSE: AIN) is primarily in the textile and material processing business. It operates under two divisions, namely 1) Machine Clothing (MC) segment, which manufactures and distributes custom-designed fabrics and belts for the paper, nonwovens, and other process industries, and 2) Albany Engineered Composites (AEC) segment, which manufactures and distributes engineered composite parts for the aerospace and defense industries.

Latest News:

• Dividend Declaration: The firm announced a quarterly interim dividend of USD 0.20 per share on its Class A and Class B common stock on August 25, 2021, which was paid on October 07, 2021, to shareholders of record on September 07, 2021.

9MFY21 Results:

• Slight Progress in Topline: AIN witnessed a minor increase of 2.31% in net sales to USD 689.32 million during 9MFY21 compared to USD 673.75 million during 9MFY20.
• Boost in Bottomline: Its net income was USD 89.99 million during 9MFY21, compared to USD 69.63 million during 9MFY20.
• Leveraged Balance Sheet: The company exited the quarter with a cash balance of USD 286.22 million and a total debt of USD 350.00 million.

Key Risks: 

• Supplier Concentration Risk: AIN relies on a small number of suppliers for raw materials and production equipment. As a result, any delay in obtaining the required amount or quality might cause operational disruptions and negatively influence overall performance.
• Commodity Risk: The company consumes a substantial amount of petroleum or petroleum derivative-based raw materials. As a result, any hike in their prices, particularly in places where inflation is strong, might raise AIN's expenses, which it may not successfully offset through price increases, productivity gains, or cost-cutting efforts.

Outlook:

• Revenue and EPS Estimates: AIN expects FY21 revenue to be in the range of USD 900 – 920 million as of October 25, 2021, estimating an effective interest rate of 28 – 30% and GAAP EPS of USD 3.23 – 3.38.
• CAPEX and Adjusted EBITDA: Its capital expenditures are forecasted to be in the region of USD 40 – 50 million in FY21, and the adjusted EBITDA will range between USD 230 – 240 million.

Valuation Methodology: EV/EBITDA 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.

AIN Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

AIN's stock price has surged 58.17% in the past twelve months and is currently leaning towards the higher end of the 52-week range of USD 48.57 to USD 93.43. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 51.80. We have valued the stock using the EV/EBITDA multiple-based relative valuation methodology and arrived at a target price of USD 75.22.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 80.73, up 1.73% as of October 28, 2021, 2:18 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and industry information have been taken from REFINITIV.