Thursday, March 20, 2014

Seeking Alpha: Global Brass And Copper Needs Some Polish

The theme of a recovery in U.S. housing demand and construction (as well as non-residential construction) is hardly "new news", but it is still quite relevant to the prospects of Global Brass and Copper (BRSS), the largest converter of copper and brass products in the U.S.. Global Brass has not been public all that long, but the stock has not been able to hold on to initial optimism, as volume growth, capacity utilization and EBITDA generation have all been trending below the bullish predictions of sell-side coverage initiation pieces.

The demand outlook for Global Brass is a little muddled in my view. Large markets like autos and industrial machinery have already largely recovered and while housing/construction may start providing a tailwind, there's a headwind to consider from lower munitions sales. I'm also not terribly impressed with Global Brass's EBITDA margin relative to other fabricator/converter comps. Even so, and even with a discounted multiple, these shares do look undervalued today and could offer some meaningful upside if or when volume and leverage start to materialize.

Follow this link to read more:
Global Brass And Copper Needs Some Polish

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