Mayville Engineering $MEC is a manufacturer of metal structure | 🚀 Robin Rocket

Mayville Engineering $MEC is a manufacturer of metal structures and various metal components for mechanical engineering and other industries. The company supplies major manufacturers such as Deere, Paccar, Honda Motor and Caterpillar.
Target price from Jefferies - $25, upside potential +33%

Theses in favor of the company's growth:

• Promising deals. Last spring, $MEC announced a contract for the supply of components for a leading American fitness company, which is expected to become one of the top 10 customers by sales volume next year.

The deal could bring the company an additional $125 million in revenue and increase EBITDA by $18 million.

• Cyclicity. Most of $MEC's clients are from the industrial sector, which is dependent on market cycles. At the moment, there is some decline in the sector, which provides an excellent opportunity to form a position at attractive prices.

• Underestimation of the company. Analysts note that long-term growth from reshoring has not yet been incorporated in the $MEC quotes. The company's shares are traded with a forward EV / EBITDA of 4x. At the same time, this multiplier on average for industrial companies from Russell 2000 = 10x.

• Opportunities for acquisitions. The company often acquires smaller competitors. These deals reduce costs, generate new customers, expand product lines, and improve workflow efficiency. Analysts note that the company has sufficient funds to make new deals.

Fundamental indicators:

• Market cap = $375 million
• fwd P/E = 10x
• fwd P/E sectors = 30x

Not an investment recommendation.