On Monday, Stifel maintained its Buy rating on Hillman Solutions Corp. (NASDAQ:HLMN) and increased the price target to $16.00, up from the previous $14.00. The firm's decision follows recent meetings with Hillman's CEO Doug Cahill and VP of IR and Treasury Michael Koehler, which focused on several key business prospects.
During the meetings held on March 26 and 27, investors concentrated on Hillman's organic growth and its capacity to maintain pricing power as costs stabilize. Additionally, the potential for mergers and acquisitions (M&A) was discussed, especially as the company's balance sheet leverage shows improvement. These factors contribute to the optimistic outlook for the company's future performance.
Hillman Solutions also indicated that while its Robotic Drilling Systems (RDS) segment is not considered a core part of the business, the company is looking to realize some benefits from recent upgrades to its MinuteKey and QuickTag products before considering a sale. This strategic approach to the RDS segment adds another layer to Hillman's business model and potential value creation.
The revised price target assumes that Hillman Solutions will acquire $7 million of annual EBITDA at a multiple of 6-8 times. This acquisition strategy is expected to significantly drive growth in the company's Hardware & Protective Solutions area, which is a key component of Hillman's overall business strategy.
Stifel's updated price target reflects confidence in Hillman Solutions' growth trajectory and strategic initiatives. The company's focus on organic growth, M&A opportunities, and the integration of the RDS segment are key factors contributing to the positive outlook.
InvestingPro Insights
As Stifel maintains a bullish stance on Hillman Solutions Corp., real-time data from InvestingPro aligns with some of the optimism surrounding the company's potential. Hillman's market capitalization stands at a solid $2.08 billion, indicating a notable presence in its sector. Analysts tracking the company have shown confidence, with 5 of them revising their earnings estimates upwards for the upcoming period, a sign that Hillman's financial prospects may be brighter than previously thought. This is further supported by the company's gross profit margin, which remains strong at 43.86% for the last twelve months as of Q1 2023.
Despite the lack of profitability over the previous twelve months, analysts predict Hillman will turn a profit this year. InvestingPro Tips also highlight that Hillman's stock price has experienced a large uptick over the last six months, with a 28.97% total return, and is trading near its 52-week high, at 98.7% of this peak. Investors interested in deeper analysis might consider the liquid assets of the company, which currently exceed its short-term obligations, potentially offering a buffer against market volatility.
For those looking to make informed decisions on Hillman Solutions, additional insights are available. InvestingPro offers a suite of further tips, with 11 more listed for those seeking comprehensive analysis. To gain access to these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With this, investors can stay ahead of market trends and make data-driven decisions.
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