H.B. Fuller Seeing The Best Volumes In Years, But Must Improve Margins

So far so good for H.B. Fuller (NYSE:FUL) (“Fuller”) and its leverage to the economic recovery. Not only was fiscal fourth quarter EBITDA almost 10% better than the sell-side expected, but the company also saw its best quarterly volume growth in three years, and management offered solid guidance for the next year.

While I do expect better revenue and cash flows in the coming years, Fuller shares have been a long-term laggard in the specialty chemical space (though peers like Henkel (OTCPK:HENKY) and Arkema (OTCPK:ARKAY) have fared even worse). Fuller has underwhelmed on organic growth, despite the ongoing use of adhesives to replace mechanical fastening, and likewise on margins and returns on capital. These shares do look a little undervalued on both a cash flow and EV/EBITDA, but progress on margins looks like a real key to unlock more value for shareholders.

 

Click here for the full article: 

H.B. Fuller Seeing The Best Volumes In Years, But Must Improve Margins