Wednesday, May 13, 2015

Seeking Alpha: Materion Executing On A Multi-Armed Growth Strategy

Kudos to Materion (NYSE:MTRN) for creating a plan to emphasize value-added products, improve margins, and generate more free cash flow and then executing, or at least starting to execute, on it. The shares aren't much higher than when I last wrote about the stock, but I thought the shares looked a little pricey then and there haven't been too many outperformers in the specialty alloy space.

I do still like this company, and I think the company's leverage to advanced industrial components, auto electronics, consumer products, and so on will serve it well. I also like the prospects for margin leverage and improved asset efficiency leading to free cash flow that can be reinvested into complementary acquisitions that will further stimulate revenue growth and margin leverage.

All of that said, it's unusual for a specialty alloys company to generate FCF margins above the mid-single digits for any sustained length of time and I think my 7% annualized organic revenue growth number is generous as is. I like the prospects for Materion to do well against undemanding growth comps this year and tomorrow's investor day could be a catalyst, but there's not very much fundamental undervaluation here that I can see.

Read the full article here:
Materion Executing On A Multi-Armed Growth Strategy

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