Myers Industries, Inc.

MYE Details

Myers Industries, Inc. (NYSE: MYE) is a manufacturer, designer, and marketer of plastic and rubber products for the industrial, agricultural, automotive, and commercial sectors. Its operating segments are 1) Material Handling, which produces reusable plastic containers, pallets, bulk shipping containers, automobile parts, and other connected items for the US and Canadian markets, and 2) Distribution, engaged in the distribution of tools and supplies for the tires and automobile industries. As of November 24, 2021, the company's market capitalization stood at USD 742.90 million.

Latest News:

• Dividend Declaration: On October 28, 2021, MYE’s board of directors approved a quarterly cash dividend of USD 0.135 per common share, payable on January 05, 2022, to shareholders of record December 06, 2021.

Q3FY21 Results:

• Improvement in Revenues: MYE's revenues increased by 51.26% to USD 200.06 million in Q3FY21 (ended September 30, 2021) compared to USD 132.26 million in Q3FY20, attributable to YoY growth of 72.49% in Material Handling Segment.
• Drop in Net Income: The Q3FY21 net income reduced to USD 7.90 million from USD 8.69 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 14.83 million and total debt of USD 121.40 million.

Key Risks:

• Input Price Risk: The company's primary raw materials include resins, colorants, and natural and synthetic rubber. During the last few years, the company has seen significant increases in resin costs. As a result, any lag in the supply or requisite quantity or unfavorable pricing could distort the company's overall performance.

Outlook:

• FY21 Revenue and EPS Guidance: In % terms, MYE expects the YoY growth of mid-to-high 40% range in its revenue, significantly driven by acquisition of Elkhart and Trilogy. It also expects its diluted EPS to range between USD 0.86 – 1.01, along with an adjusted diluted EPS of USD 0.90 – 1.05.
• Capex Guidance: In FY21, MYE anticipates incurring capital expenditure of ~USD 16 – 19 million.

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 stock price has increased 13.25% in the past twelve months and is currently trading close to the mid-band of its 52-week range of USD 16.94 to USD 23.98. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 47.56. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 18.67.

Considering the uptick in the stock price, decline in profitability, and current valuation, we believe the decent business fundamentals are adequately reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 20.52, up 0.10% as of November 24, 2021.

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

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