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Myers Industries, Inc.
MYE Details
Myers Industries, Inc. (NYSE: MYE) is engaged in manufacturing, designing, and marketing plastic and rubber goods. The company produces a wide range of products to serve industrial, agricultural, automotive, and consumer industries. The company operates in two segments, namely, 1) Material Handling, which manufactures a wide variety of goods such as plastic reusable containers, pallets, small bins, shipping containers, and molded plastic tanks for water, fuel, and waste handling for the U.S. and Canada markets, and 2) Distribution, which is engaged in distributing tools and supplies used in tire servicing and automotive industries. As of June 09, 2021, the company’s market capitalization stood at USD 778.74 million.
Continued Price increases: On March 22, 2021, the company announced an increase in prices of the Material Handling segment in the range of 9% to 12%, with effect from April 01, 2021. The company had previously announced an 8% increase in prices with effect from March 01, 2021. The increases are in response to inflation in raw material prices, particularly steel and resin.
Robust Q1FY21 Results: The company reported a steep increase of 42.68% of net sales to USD 174.43 million in Q1FY21 (ending March 31, 2021) compared to USD 122.25 million in Q1FY20 (ending March 31, 2020). The Material Handling segment contributed 74.46%, while the Distribution segment contributed 25.54% of the net sales in Q1FY21. However, the company reported a 56.32% decline in net income to USD 7.30 million in Q1FY21 compared to USD 16.72 million in Q1FY20. As of March 31, 2021, the company had USD 16.66 million of cash, USD 211.20 million under the Loan Agreement, and an outstanding debt of USD 81.30 million, including a finance lease liability of USD 10.30 million.
Segment performance (Source: Earnings Presentation, May 2021)
Key Risks: The company uses basic raw materials such as resins, colorants, and natural and synthetic rubber. Over the past several years, the company has witnessed periods of rapid increases in resin prices. The company's top line, as well as profitability, maybe significantly dented due to such gyrations in raw material prices.
FY21 Guidance (Source: Earnings Presentation, May 2021)
Valuation Methodology: Price/Earnings Multiple Based Relative Valuation
(Data Source: REFINITIV, Analysis by Kalkine Group)
MYE Daily Technical Chart (Source: REFINITIV)
Stock Recommendation: MYE’s share price has surged by 41.66% in the past nine months and is currently trading in the higher band of the 52-week range of USD 12.75 to USD 23.98. The stock is currently trading above its 200 DMA levels. We have valued the stock using the Price/Earnings based relative valuation methodology and arrived at a target price of USD 23.17. Considering the significant rise in the stock price in the past nine months, decent fundamental growth, increase in raw material prices, and current valuation, we recommend a “Hold” rating on the stock at the closing price of USD 21.20, down by 1.76% as of June 09, 2021.
* The reference data in this report has been partly sourced from REFINITIV.
CURO Group Holdings Corp.
CURO Details
CURO Group Holdings Corp. (NYSE: CURO) is a multi-product consumer finance company serving a wide range of prime and non-prime customers across the U.S. and Canada. The company operates in various consumer finance products such as unsecured installment loans, secured installment loans, single-pay loans, and ancillary financial products such as check cashing, money transfer services, and other allied services. As of March 31, 2021, CURO operates in 209 U.S. retail locations with an online presence in 36 states and 201 Canadian stores with an online presence in 5 provinces. The company operates in three segments, namely, 1) the US segment provides revolving Letter of Credit (LOC) and installment loans to U.S.-based customers. 2) Canada Direct Lending segment provides revolving LOC and installment loans to customers in Canada. 3) Canada POS Lending segment provides revolving LOC and other ancillary financial products to customers in Canada. As of June 09, 2021, the company’s market capitalization stood at USD 756.88 million.
Business combination of Katapult and FinServ Acquisition: On June 09, 2021, the company announced the completion of a merger between Katapult Holding, Inc. (in which it has a minority stake) and FinServ Acquisition Corp. (FinServ). The company will receive USD 146.90 million cash and retain its 22.20% ownership stake in the new company, as per the terms of the business combination agreement. The value of CURO’s cash and stock totals USD 464.70 million on the closing price of FSRV stock as of June 08, 2021.
Q1FY21 Results: The company reported a 29.98% decline in revenues to USD 196.60 million in Q1FY21 (ending March 31, 2021) compared to USD 280.80 million in Q1FY20, primarily due to a decline in U.S. and Canada Direct Lending revenues. The company reported an increase in gross profits to USD 101.90 million in Q1FY21 compared to USD 99.70 million in Q1FY20. The company’s provision for losses decreased by 68.10% to USD 36.20 million in Q1FY21 compared to USD 113.50 million in Q1FY20. CURO provided the increase in the quarterly dividend to USD 0.11 per share, an increase of 100%, and affirmation of the next quarterly dividend, payable on May 27, 2021, to stockholders of record as of May 14, 2021.
Financial Performance (Source: Earnings Presentation, May 03, 2021)
Key Risks: Revenues from Texas, California, and Ontario contributed 22.60%, 13.60%, and 16.60% of the company’s total revenue for the FY20 and contributed 24.60%, 18.40, and 13.60% of the company’s total revenues for the FY19, respectively. Therefore, any unfavorable economic or operational event in these areas could hurt the company’s financials.
Valuation Methodology: Price/Earnings Multiple Based Relative Valuation
(Data Source: REFINITIV, Analysis by Kalkine Group)
CURO Daily Technical Chart (Source: REFINITIV)
Stock Recommendation: CURO’s share price has surged 142.99% in the past nine months and is currently leaning towards the higher end of the 52-week range of USD 20.81 to USD 6.52. We have valued the stock using the Price/Earnings based relative valuation methodology and arrived at a target price of USD 19.14. Considering the significant rise in the stock price in the past three months, acquisitions of new businesses, and current valuation, we recommend a “Hold” rating on the stock at the closing price of USD 18.03, down by 0.83% as of June 09, 2021.
* The reference data in this report has been partly sourced from REFINITIV.
Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.
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Past performance is not a reliable indicator of future performance.
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