Near a 52-week high and up almost 90% over the last year, Fox Factory (NASDAQ:FOXF) has done well for investors. There's certainly a lot to like in the company's progress with gross margins over the last few years, and winning business from Ford (NYSE:F) and Toyota (NYSE:TM) for new off-road trucks is certainly good for the growth story in the powered vehicle business.
The "but" is that at this sort of valuation, the company pretty much has to see all of its major drivers go right. This isn't a quality call; I think Fox Factory is a good company with a strong outlook. My problem is that it looks as though it takes a long-term compound FCF growth rate in the high teens to drive a fair value above $30 today, and that seems like a high hurdle to meet (let alone surpass).
At This Valuation, Fox Factory Has To See Its Expansion Opportunities Pay Off