Worthington Industries (WOR), mcap=$2.5bn, price $50.90 vs $43.00

– High-quality business, currently experiencing the best run of profitability, but trading at all-time low multiples to earnings and balance sheet.
– Industrial manufacturer of value-added metal products.
– Unjustifiably sold-off in line with steel mills although steel processing is only 40% of earnings.
– Sits at 10x average earnings over the last 10 years (and under 6x TTM PE, but was over-earning), with a historical multiple of 16x.
– 35% owned and operated by the chairman with a great track record of capital allocation.

– At 12.5x PE (the average of 10 years) exit multiple after five years, IRR is 16%.
– Using 2.6x P/B exit (also 10-year average) results in 30% over 5 years.

Exp. gain: 16% to 30% IRR over five years.

Full $WOR write-up (free guest account required):

Leave a Comment