Atkore Inc. (ATKR) is a leading provider of electrical, safety, and infrastructure solutions worldwide. The Harvey, Ill., company has a vast network of manufacturing and distribution facilities worldwide, allowing it to serve an international clientele. The company’s end markets include construction companies, industrial giants, original equipment manufacturers, and government contractors. ATKR has an ISS Governance QualityScore of 1, indicating low governance risk.
ATKR has been capitalizing on the resumption of manufacturing and industrial activities since late 2020, following the pandemic-fueled slowdown. The company’s key financial metrics have registered double-digit growth over the past year.
Furthermore, ATKR’s shares have gained 48.2% in price over the past year, outperforming the benchmark S&P 500 index’s 15.3% gains over this period.
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Here is what could shape ATKR’s performance in the near term:
Impressive Growth Story
ATKR’s revenues have grown at a 20.3% CAGR over the past three years and a 16.7% CAGR over the past five years. The company’s EBITDA has risen at a 57.8% CAGR over the past three years and at a rate of 38.2% per year over the past five years. In addition, ATKR’s net income and EPS have risen at CAGRs of 73.1% and 76.6%, respectively, over the past three years, and at CAGRs of 59.9% and 69.4%, respectively, over the past five years. The company’s levered free cash flow has improved at a rate of 72% per annum over the past three years and at a 33% CAGR over the past five years.
Furthermore, ATKR’s trailing-12-month revenues and net income increased 78.1% and 249.3%, respectively, year-over-year. Its trailing-12-month EPS improved 257.2% from the same period last year, while its trailing-12-month levered free cash flow rose 105.8% year-over-year.
Robust Financials
ATKR’s net sales increased 64.5% year-over-year to $840.80 million in its fiscal year 2022 first quarter, ended Dec. 24, 2021. This can be attributed to a 65.7% rise in electrical revenues and a 60.7% improvement in Safety & Infrastructure revenues. Its net income was $204.84 million, up 140.8% from the same period last year. Its adjusted EBITDA rose 113.9% from the prior-year quarter to $293.01 million. And the company beat the consensus revenue and EPS estimates by 9.4% and 28.6%, respectively.
ATKR President and CEO Bill Waltz said, “Atkore delivered record results this quarter despite a challenging operating environment…The commitment of our team and our focus on executing the Atkore Business System drove margin expansion in each of our segments. We were particularly pleased with the positive volume growth in our international markets led by solid demand and growth from data center projects.”
Bullish Growth Prospects
The $800.90 million consensus revenue estimate for its fiscal year 2022 second quarter (ending March) indicates a 25.3% improvement year-over-year. In addition, analysts expect ATKR’s revenues to rise 6.2% year-over-year to $3.11 billion in fiscal 2022 (ending September).
Furthermore, the Street expects ATKR’s EPS to increase 33.3% and 2.5%, respectively, year-over-year to $3.72 and $13.30 in the current quarter and current year, respectively. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
POWR Ratings Reflect Rosy Prospects
ATKR has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ATKR has an A grade for Quality and a B for Growth and Value. The company’s 100.62% trailing-12-month ROE is 628.9% higher than the 13.81% industry average and in sync with its Quality grade. In addition, ATKR’s remarkable growth story justifies the Growth grade. Also, the stock’s 0.80 forward non-GAAP PEG ratio is 46% lower than the 1.49 industry average, in sync with the Value grade.
Of the 37 stocks in the Industrial – Metals industry, ATKR is ranked #6.
Beyond what I have stated above, view ATKR ratings for Momentum, Sentiment, and Stability here.
Note that ATKR is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Bottom Line
As the global economy rebounds from the pandemic-driven challenges, the demand for ATKR’s solutions is expected to remain high. Moreover, the passage of the landmark $1.2 trillion infrastructure bill is expected to shape ATKR’s performance over the next few years. Thus, ATKR is an ideal investment bet now.
Click here to check out our Industrial Sector Report for 2022
How Does Atkore (ATKR) Stack Up Against its Peers?
While ATKR has a B rating in our proprietary rating system, one might want to consider looking at its industry peers, Ryerson Holding Corporation (RYI), BHP Group Ltd. (BHP), and Marubeni Corporation (MARUY), which have an A (Strong Buy) rating.
What To Do Next?
If you would like to see more top growth stocks, then you should check out our free special report:
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Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +48.22% a year.
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ATKR shares were trading at $105.65 per share on Wednesday morning, down $1.12 (-1.05%). Year-to-date, ATKR has declined -4.98%, versus a -5.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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