Strong Volumes Help Insteel Start The Year Right

I cautioned in my recent piece on Insteel (IIIN) that volatility in end-market demand and import pricing made this a more volatile story and a harder company to model, and that worked out in a positive way in the fiscal first quarter, with Insteel reporting better results on stronger volumes. Management also noted that its transportation end-markets looked healthy and that the pricing cycle may be past the worst.

I thought Insteel was undervalued back in late December, but that the volatility and risk made it a difficult stock to recommend for other investors. I feel better about the volume and margin situations, but I think that view still basically holds - the shares do still offer some upside on an EV/EBITDA basis, and the company could well outperform my expectations, but this remains a tricky stock to model, and a lot of the key factors that will influence revenue and margins are beyond management's control.

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Strong Volumes Help Insteel Start The Year Right