Tuesday, February 9, 2016

Seeking Alpha: Miller Industries Is No Wreck

Although I thought the valuation of Miller Industries (NYSE:MLR) was getting a little stretched in the spring of 2015, I'm still a little surprised that the shares have fallen close to 20% despite a generally decent performance. Perhaps that's the price of toiling in obscurity (as Miller is uncovered) or maybe investors were spooked by the surprisingly weak gross margin in the first quarter and the generally unimpressive margin trajectory seen this year. After all, if Miller can't generate good margins when volumes are high and input costs like steel and aluminum are low, isn't that a problem?

I am inclined to think that things are fine at Miller. Given that the Tennessee plant is running two 10-hour shifts a day, I don't think lack of demand is the problem, and the eventual smoothing out of plant construction and reorganization should help. I think Miller is undervalued, but I'm also looking for levels of cash flow production in the future that have been difficult for the company to maintain in the past. Investors should also note that the liquidity and float are too low here for this to ever be a well-covered stock on the institutional side.

Read the full article here:
Miller Industries Is No Wreck

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