This company, which primarily manufactures components for recreational vehicles, has been grouped into recreational vehicles sector in sport& recreation vehicles industry.
It seems that the demand for traditional toys provided by companies in this sector has been declining (excluding effect of toys “R” us) in matured markets. However, demand for value-added toys, including those using high technology and popular story related brands, seems to be stable. Emerging market may present one of options for these toys’ companies to maintain their growth.
While it may not significant for Toys “R” us’ liquidation to impact companies’ sales, it already causes direct impact on many companies’ profit margin in 2017 and 2018. The typical gross margin is about 37% and with a SG&A as percentage of sales of 39% the operating margin is about -3% in 2018. The typical enterprise price/sales ratio is 1.6.
It seems that the demand for component of recreation vehicles of this company has been strong and increasing fast in the past two-three years as indicated by the increase in sales related products thanks to strong increase in industry shipment of the related vehicles.
The first three months of fiscal 2018 compared with the same period of 2017 (ended Mar 31 2018)
Organic revenue increased about 20% due to increase of about 15% in shipment of RV across industry.
Fiscal 2017 compared with fiscal 2016
Organic revenue increased about 25% due to increase of about 18% in shipment of RV across industry.
Fiscal 2016 compared with fiscal 2015
Organic revenue increased about 16% due to increase of about 15% in shipment of RV across industry.
Its gross margin was basically flat at around 22% in 2018 due to combining impact of leveraging of increased revenue and changes in cost of raw materials. With the flat SG&A as percentage of sales (at about 13%), we see a flat operating margin (at 9%in 2018). Its average EBI/share increased largely since 2015.
Stock performance
This company is having an enterprise price/EBI ratio of 18. We think that its stock is being relatively fairly valued compared.
