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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