Vishay Precision Group, Inc.

VPG Details

Vishay Precision Group, Inc. (NYSE: VPG) manufactures and distributes sensors, sensor-based measurement systems, customized resistors, and strain gauges based on its proprietary technology. The company's operating segments are Sensors, Weighing Solutions, and Measurement Systems.

FY21 Results:

• Growth in Revenues: The company reported a 17.83% rise in net revenues to USD 317.92 million in FY21 (ended December 31, 2021) from USD 269.81 million in FY20, growth in revenue of precision resistors in the test and measurement and other markets, slightly offset by decreasing sales in avionics, military, and space.
• Surge in Bottomline: Its net income in FY21 was USD 20.22 million, significantly increased from the USD 10.79 million reported in FY20.
• Margin Expansion: During FY21, the company’s reported gross margin expanded by 80bps to 39.4% from 38.6% reported a year before. This was primarily driven by solid topline performance and marginal decline is COGS as % of sales.

• Balance Sheet Position: The company ended FY21 with a cash balance of USD 84.34 million and total debt of USD 60.71 million.

Key Risk:

• Trade Tariff Risk: VPG manufactures in several nations, including China, Europe, Canada, Israel, and the United States. As a result, any significant increase in tariffs or other limitations on imports into the US could harm the company's operations and finances.
• Currency Fluctuation Risk: VPG derives a significant amount of its revenue in currencies other than USD, thus exposing it to currency volatility risk.

Outlook:

• Q1FY22 Estimates: VPG announced in its FY21 release that it expects revenue to range between USD 83 and 91 million in Q1FY22, based on constant Q4FY21 exchange rates.

 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 FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

VPG's stock price has fallen 15.31% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 29.22 to USD 39.71. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 37.57.

Considering the correction in the stock price, positive outlook, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the current price of USD 30.49, down 0.26% as of March 07, 2022, at 01:39 AM ET.

One-Year Technical Price Chart (as on March 07, 2022, at 01:39 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.