Over the last six months or so, MTS Systems (NASDAQ:MTSC)
has remained a consistent (and perhaps frustratingly consistent) story.
The stock has done a little better than the S&P 500 since my last piece,
and the company has been logging good order growth, but order growth
has been slowing and the company's margin trajectory hasn't been strong.
It's
hard for me to work up a lot of enthusiasm for the shares at today's
valuation. A large backlog of custom orders will make margin leverage
more challenging, and I have my doubts as to whether today's global
economic environment is conducive to a re-acceleration of orders. I
presently think that the mid-$70s is about where the shares ought to
trade, but I will note that if management can hit its revenue growth and
margin leverage targets (both of which are above my estimates), a fair
value in the high $80s to low $90s comes into play.
Read the full article here:
A Strong Order Book Can Drive MTS Systems, But Watch The Margins
No comments:
Post a Comment