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On Monday, DA Davidson reaffirmed its positive stance on Northwest Pipe Company (NASDAQ:NWPX), maintaining a Buy rating and a $57.00 price target for the stock. Brent E. Thielman, the firm’s analyst, noted that their Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) estimates for the company have been slightly reduced, mainly due to weather-related impacts in the first quarter, while their earnings per share (EPS) estimates remain unchanged. The company currently generates $67.37M in EBITDA, with a market capitalization of $428.21M.
Thielman highlighted several factors contributing to the optimistic outlook, including recent order activity in the Precast segment, which is expected to complement the ongoing demand in the Steel Pressure Pipe (SPP) business. He also pointed out the company’s anticipated sustained positive cash generation leading into 2025. According to InvestingPro, the company has demonstrated strong revenue growth of 10.85% over the last twelve months.
The analyst remarked on Northwest Pipe’s strong financial position, with low net leverage at 0.5 times trailing twelve months (TTM) EBITDA, which provides the company with the flexibility to explore inorganic growth opportunities within the Precast sector. InvestingPro data confirms this robust financial health, showing a healthy current ratio of 3.49 and a modest debt-to-equity ratio of 0.35.
Furthermore, Thielman suggested that Northwest Pipe’s evolving narrative, which includes both organic and inorganic growth initiatives, remains undervalued by the market. He indicated that the stock is currently trading at approximately 12 times EPS and less than 7 times EBITDA, which he believes does not fully reflect the company’s potential, especially when considering the cyclical opportunities in the near term. This analysis aligns with InvestingPro’s assessment, which indicates the stock is currently undervalued based on its proprietary Fair Value model. Get access to 8 additional exclusive ProTips and a comprehensive Pro Research Report for deeper insights into NWPX’s investment potential.
In other recent news, Northwest Pipe Company reported its fourth-quarter 2024 earnings, which showed mixed results. The company exceeded expectations with an earnings per share (EPS) of $1.00, surpassing the forecasted $0.91. However, revenue fell short of projections, coming in at $119.6 million compared to the anticipated $120.43 million. Despite the earnings beat, the revenue miss raised concerns among investors. The company also achieved record gross profit and margins, indicating strong operational performance.
Northwest Pipe Company is focusing on strategic investments to enhance growth, aiming for a $100 million run rate at its Geneva and Park facilities by the end of 2026. The company is also exploring mergers and acquisitions to expand its market presence. Analyst firms like Sidoti and Company have taken note of the company’s strategic direction, although no specific upgrades or downgrades were mentioned. Additionally, the company is dealing with ongoing tariff issues, which could impact future costs. These recent developments highlight the company’s efforts to navigate market challenges while aiming for continued growth.
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