Unique Fabricating Inc

Unique Fabricating, Inc. (NYSE Arca: UFAB) engineers and manufactures components for customers in the transportation, appliance, medical, and consumer/off-road markets. The Company’s solutions are comprised of multi-material foam, rubber, and plastic components and are utilized in noise, vibration, and harshness (NVH) management, acoustical management, water and air sealing, decorative and other functional applications.

Recent Financial and Business Updates:

• In the third quarter of 2022, UFAB reported a 15.4% increase in net sales, amounting to USD 34.5 million, driven mainly by higher light vehicle production in North America compared to the same period in 2021. Gross profit for Q3 2022 was USD 3.0 million, accounting for 8.8% of net sales, down from USD 3.3 million, or 11.0% of net sales, in the same period last year.
• Selling, general, and administrative expenses were USD 4.4 million, representing 12.8% of net sales, down from USD 5.7 million, or 19.2% of net sales, for the same period last year. Additionally, the company recorded a non-cash goodwill impairment charge of USD 4.8 million during Q3 2022.
• The net loss in the third quarter of 2022 amounted to USD 10.6 million, or USD 0.90 per basic and diluted share, compared to a net loss of USD 1.9 million, or USD 0.19 per basic and diluted share, in the third quarter of 2021. The increased net loss was primarily due to USD 4.2 million higher income tax expense in Q3 2022 related to establishing valuation allowances for deferred tax assets in Mexico and Canada, as well as the one-time USD 6.1 million gain recognized in Q3 2021 from the forgiveness of the Company's PPP Loan.
• As of September 30, 2022, UFAB had approximately USD 0.5 million in cash and cash equivalents, compared to USD 0.7 million at the end of December 2021. The total outstanding debt as of September 30, 2022, was USD 47.7 million, slightly lower than USD 48.4 million as of December 31, 2021.

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance range of USD 0.18-USD 0.21, from where price has taken support in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction. The RSI (14 period) momentum indicator is at a value of 53.85, correcting from the overbought zone, with expectations of some consolidation. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels respectively.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the past months, small market capitalization, and technical indicators analysis, a ‘Watch’ rating has been given to Unique Fabricating, Inc. (NYSE Arca: UFAB) at the current market price of USD 0.2506 as of August 01, 2023, at 08:10 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

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

The reference date for all price data, currency, technical indicators, support, and resistance levels is August 01, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by the individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.