Thursday, October 5, 2017

Miller Industries Isn't Growing Like It Used To

Ignored by sell-side analysts, Miller Industries (MLR) has long been a company that I’ve liked – the long-term revenue growth is modest and the business is cyclical, but the returns on capital have been better than decent. These shares have done a little better than the S&P 500 over time and quite a bit better than Oshkosh (OSK) and Spartan (SPAR) – neither of which are great comps, but the pool of candidates is limited – and the shares are up about a third from the time of my last write-up.

I’m not as bullish now, though. Sales growth has slowed and margin leverage has started looking wobbly. What’s more, the valuation is more demanding now and there are some macro concerns for the towing industry as a whole. Although these shares are by no means wildly overvalued in my opinion (and could have some leverage to tax reform), I don’t see enough of a discount to fair value to excite me today as a new buyer.

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Miller Industries Isn't Growing Like It Used To

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