Worthington Enterprises Inc. (WOR): FQ26 Recap: Organic Initiatives Intact Though Limited Visibility Leaves us Cautious

研报英文原文证据摘录

Worthington Enterprises Inc. (WOR): FQ26 Recap: Organic Initiatives Intact Though Limited Visibility Leaves us Cautious

rice/cost positive in the next fiscal year, we

model a moderation in the rate of growth for price/mix. We also look for volumes to be

approximately flat, which includes the impact of an especially tough F3Q comp. This

brings our F2027 estimate for segment revenues to up 1.9% YOY. We are also

encouraged as the segment EBITDA margin is approaching the long-term high-teens

target. This comes as the company is effectively offsetting inflation while realizing

ongoing productivity gains. Broadly, we believe WOR’s dedication to innovation, with

additional product launches expected in F2027, suggests upside to the model over time.

We forecast the segment EBITDA margin at 17.6% for F2027, up a modest 4bps.

Revising Estimates and Price Target, Maintain Sell Rating: Given the factors noted

above, our F2027 adj. EPS estimate goes to $3.65 from $4.00, while F2028 is now $4.00

from $4.40. We introduce our F2029 forecast at $4.41. As we roll forward our valuation

by one quarter and raise our target multiple, our 12-month price target goes to $50

from $47, which is based on our SOTP analysis implying 8.5x (was 7.9x) our Q5-Q8 adj.

EBITDA estimate. The higher multiple reflects our increased confidence in the company’s

ability to execute within its core operations as well as continued positive contributions

from the WAVE JV.

Updating Scenario Analysis: Over the next 12 months, our upside case implies a

valuation of $65, which is 16.3x the F2027 adj. EPS estimate. Our downside case implies

a valuation of $41, which is 12.5x the F2027 adj. EPS estimate. Given the current

valuation, we see unfavorable risk/reward for WOR.

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