On Wednesday, EF Hutton, a financial services firm, adjusted its price target for Core Molding Technologies (NYSE:CMT), increasing it to $27.00 from the previous $25.00. The firm has also reiterated its Buy rating on the company's shares.
The new price target reflects a cautious stance on the company's performance, anticipating a 10-15% sales decline due to several factors including the conclusion of certain Volvo (OTC:VLVLY) sales programs, a broader slowdown in the truck cycle, and a normalization of consumer spending.
The analyst from EF Hutton forecasts a 7% sales decline for Core Molding Technologies in the current year, with the majority of the decrease expected in the first half, followed by a slight rebound in sales growth in the latter half. For the year 2024, the projection is for earnings per share (EPS) to drop by 20% to $1.86, with sales again decreasing by 7%. The forecast also includes a contraction in gross margin by 70 basis points to 17.3% and a decrease in EBITDA margin by 20 basis points to 11.6%. The adjustments take into account the company's selling, general and administrative (SG&A) expenses, which are not expected to incur significant one-off costs this year.
According to the analyst, the sales headwinds from Volvo are likely to impact lower-margin products compared to Core Molding Technologies' overall portfolio. The company's variable cost structure, which has improved to 70-75% after recent enhancements, positions it well in the face of an anticipated downturn in the trucking industry, as predicted by industry experts for the first six to nine months of the current year.
InvestingPro Insights
Core Molding Technologies (NYSE:CMT) has been under the analytical lens, and recent data from InvestingPro provides further insights into the company's financial health and stock performance. A notable InvestingPro Tip points out that management has been actively engaging in share buybacks, signaling confidence in the company's value. Additionally, the valuation of Core Molding Technologies suggests a strong free cash flow yield, which could be an attractive point for investors looking for companies with the potential to generate substantial cash relative to their share price.
From a data standpoint, Core Molding Technologies boasts a P/E Ratio (adjusted) of 6.91 as of the last twelve months ending Q3 2023, indicating that the stock may be undervalued compared to earnings. The company's Price to Book ratio stands at a moderate 1.2, which could appeal to value investors. Furthermore, the company has seen a strong return over the last month, with a 14.53% increase in its stock price, showcasing recent positive momentum in the market.
For readers seeking a deeper analysis, InvestingPro offers additional InvestingPro Tips on Core Molding Technologies' financials and stock performance, which can be accessed by visiting https://www.investing.com/pro/CMT. Interested investors can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 7 more tips available on InvestingPro, investors can gain a comprehensive understanding of Core Molding Technologies' prospects and make more informed decisions.
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