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Simpson Manufacturing Co Inc (SSD)
NYSE:SSD
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Simpson Manufacturing Co
(NYSE:SSD)
74Outperform
Positive Factors
Business Model
SSD's long-term prospects remain strong, behind a high-quality business model, share gains, and balance sheet.
Investments
SSD leaned into investments in 2024, positive for longer-term share gain opportunities.
Negative Factors
Financial Performance
Q3 operating margin was 21.3%, below the Street's 22.6% expectation.
Simpson Manufacturing Co (SSD) vs. S&P 500 (SPY)
Market Cap
$6.61B
Dividend Yield0.7%
Average Volume (3M)256.19K
Price to Earnings (P/E)20.7
Beta (1Y)1.41
Revenue Growth0.83%
EPS Growth-8.08%
CountryUS
Employees5,872
SectorBasic Materials
Sector Strength59
IndustryConstruction
Share Statistics
EPS (TTM)7.60
Shares Outstanding41,974,438
10 Day Avg. Volume308,872
30 Day Avg. Volume256,194
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.92
Price to Cash Flow (P/CF)14.10
P/FCF Ratio13.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$192.00Price Target Upside22.01% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Simpson Manufacturing Co Business Overview & Revenue Model
Company DescriptionSimpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells wood and concrete construction products. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and pre-fabricated lateral systems for use in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber-reinforced materials, and other repair products for use in concrete, masonry, and steel construction, as well as grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products for use in concrete construction repair, and strengthening and protection products. It also provides connectors and lateral products for wood framing, timber and offsite construction, structural steel construction, and cold-formed steel applications; and mechanical and adhesive anchors for concrete and masonry construction applications. In addition, the company offers engineering and design services, as well as software solutions that facilitate the specification, selection, and use of its products. It markets its products to the residential construction, light industrial and commercial construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Spain, Sweden, Norway, Australia, New Zealand, China, Taiwan, and Vietnam. The company was founded in 1956 and is headquartered in Pleasanton, California.
How the Company Makes MoneySimpson Manufacturing Co. primarily generates revenue through the sale of its comprehensive range of construction products, including connectors, anchors, and fasteners. These products are sold directly to construction companies, contractors, and distributors who supply the building and construction industry. The company's revenue model is driven by the continuous demand for durable and reliable construction solutions, particularly in the residential and commercial construction sectors. Additionally, Simpson Manufacturing Co. invests in research and development to innovate and expand its product offerings, which helps in sustaining its competitive edge and boosting sales. Strategic partnerships with distributors and an extensive sales network further contribute to the company's ability to reach a wide customer base and maintain robust revenue streams.
Simpson Manufacturing Co Financial Statement Overview
Summary
Simpson Manufacturing Co demonstrates strong profitability and balance sheet health, supported by strong margins and efficient equity use. While the income statement and balance sheet show positive trends, the decline in cash flow metrics suggests the company needs to focus on enhancing cash generation and management. Overall, the financial position is stable, but careful monitoring of cash flows is advised.Income Statement
Simpson Manufacturing Co shows solid financial performance with a stable gross profit margin of 45.9% and a healthy net profit margin of 14.4% for TTM (Trailing-Twelve-Months). While revenue growth has slowed slightly to 0.8% from the previous year, the company maintains strong EBIT and EBITDA margins of 19.4% and 23.3%, respectively. Overall, profitability metrics indicate good operational efficiency and profitability.82
Very Positive
Balance Sheet
The company's balance sheet reflects financial stability with a low debt-to-equity ratio of 0.03 and a solid equity ratio of 80.5% for TTM. Return on Equity is robust at 14.6%, indicating effective use of shareholders' equity for generating profits. However, the slight increase in total debt over the past year is a point to monitor for potential leverage risks.78
Positive
Cash Flow
Free cash flow decreased by 71.2% in TTM, raising concerns about cash generation. The operating cash flow to net income ratio is at 0.69, which is lower than the previous year, indicating a potential decline in cash generation efficiency. Additionally, the free cash flow to net income ratio of 0.30 suggests a need for improved cash flow management.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.23B | 2.21B | 2.12B | 1.57B | 1.27B | Gross Profit |
| 1.03B | 1.04B | 941.29M | 755.03M | 576.38M | EBIT |
| 429.98M | 475.15M | 459.07M | 367.79M | 252.36M | EBITDA |
| 518.63M | 554.21M | 532.95M | 411.44M | 297.60M | Net Income Common Stockholders |
| 322.22M | 353.99M | 334.00M | 266.45M | 187.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 239.37M | 429.82M | 300.74M | 301.15M | 274.64M | Total Assets |
| 2.74B | 2.70B | 2.51B | 1.48B | 1.23B | Total Debt |
| 98.68M | 551.57M | 623.92M | 37.09M | 37.20M | Net Debt |
| -140.69M | 121.75M | 323.18M | -264.06M | -237.44M | Total Liabilities |
| 923.03M | 1.02B | 1.09B | 300.13M | 251.63M | Stockholders Equity |
| 1.81B | 1.68B | 1.42B | 1.18B | 980.94M |
| Cash Flow | Free Cash Flow | |||
| 157.80M | 338.20M | 332.60M | 101.70M | 169.66M | Operating Cash Flow |
| 338.16M | 427.02M | 399.82M | 151.29M | 207.57M | Investing Cash Flow |
| -259.26M | -103.25M | -870.24M | -58.80M | -39.85M | Financing Cash Flow |
| -261.46M | -199.03M | 465.53M | -71.62M | -126.78M |
Simpson Manufacturing Co Technical Analysis
Negative
157.36
Price Trends
164.40
Negative
170.72
Negative
175.14
Negative
Market Momentum
-1.98
Negative
42.45
Neutral
58.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SSD, the sentiment is Negative. The current price of 157.36 is below the 20-day moving average (MA) of 159.07, below the 50-day MA of 164.40, and below the 200-day MA of 175.14, indicating a bearish trend. The MACD of -1.98 indicates Negative momentum. The RSI at 42.45 is Neutral, neither overbought nor oversold. The STOCH value of 58.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SSD.
Simpson Manufacturing Co Risk Analysis
Simpson Manufacturing Co disclosed 42 risk factors in its most recent earnings report. Simpson Manufacturing Co reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Simpson Manufacturing Co Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $43.68B | 38.02 | 33.04% | 2.10% | 2.71% | -0.63% | |
74 Outperform | $6.61B | 20.70 | 18.49% | 0.70% | 0.83% | -8.08% | |
71 Outperform | $12.20B | 19.36 | 12.63% | 1.75% | 13.41% | -44.36% | |
65 Neutral | $6.14B | 27.51 | 28.90% | ― | 5.17% | 10.39% | |
60 Neutral | $14.56B | 18.30 | -118.61% | 1.72% | -1.74% | -6.91% | |
57 Neutral | $11.81B | 40.39 | 3.22% | 4.26% | -2.63% | ― | |
47 Neutral | $2.65B | -3.07 | -22.25% | 3.27% | 3.70% | -29.53% |
* Basic Materials Sector Average
Performance Comparison
SSD
Simpson Manufacturing Co
157.08
-43.02
-21.50%
FAST
Fastenal Company
77.55
2.65
3.54%
MAS
Masco
69.54
-6.94
-9.07%
OC
Owens Corning
142.82
-23.39
-14.07%
SWK
Stanley Black & Decker
76.88
-15.17
-16.48%
TREX
Trex Company
58.10
-39.87
-40.70%
Simpson Manufacturing Co Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: -5.70% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with steady growth in net sales and strategic investments positioning the company for future growth, despite challenges in margins and market conditions, particularly in Europe.Highlights
Record Net Sales
Full year 2024 net sales were $2.23 billion, showing modest growth over 2023, with North American sales totaling $1.74 billion, an increase from $1.72 billion in 2023.
Successful Volume Growth in North America
North American volume growth exceeded U.S. housing starts by approximately 600 basis points, demonstrating above-market growth in all end markets.
Strong Cash Flow and Debt Reduction
Generated $339.8 million in cash flow from operations for the full year 2024 and reduced debt by $100.8 million.
Operational Efficiency and Leadership Strengthening
Significant investments in field sales, engineering, and digital solutions, along with strengthening the senior leadership team.
Lowlights
Gross Margin Decline
Consolidated gross margin declined to 46% from 47.1% in 2023, primarily due to higher input and labor costs.
Operating Margin Decrease
Operating margin decreased by approximately 220 basis points to 19.3%, reflecting unmaterialized anticipated market growth.
European Sales Flat
European net sales were relatively flat at $479.2 million compared to the prior year, with a 1% decrease on a local currency basis.
Adjusted EBITDA Decline
Consolidated adjusted EBITDA declined by 6.2% year-over-year, resulting in an adjusted EBITDA margin of 23.3%.
Company Guidance
During the Simpson Manufacturing Company's fourth quarter and full-year 2024 earnings call, key financial metrics were discussed, highlighting the company's modest growth in a challenging market environment. Full-year net sales reached $2.23 billion, with North America contributing $1.74 billion, slightly up from $1.72 billion in 2023. In Europe, net sales were $479.2 million, remaining mostly flat compared to the previous year. The company's consolidated adjusted EBITDA was $520.1 million, a 6.2% year-over-year decline, resulting in an adjusted EBITDA margin of 23.3%. Operating margins fell by approximately 220 basis points to 19.3%, primarily due to increased input and labor costs. Despite market headwinds, the company committed to maintaining an operating income margin at or above 20% and achieving EPS growth faster than net revenue growth. For 2025, the company anticipates U.S. housing starts to improve in the low single-digit range, with European housing starts remaining stable. Simpson Manufacturing plans to continue investing in growth, while also controlling costs to preserve margins in a potentially softer market.Simpson Manufacturing Co Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Simpson Manufacturing Reports Modest Revenue Growth in 2024
Positive
Feb 10, 2025
Simpson Manufacturing Co., Inc. reported its financial results for the fourth quarter and full year of 2024, with net sales increasing by 0.8% to $2.2 billion compared to the previous year. Despite a challenging market environment with declining housing starts, the company managed modest revenue growth and maintained a strong operational focus, declaring a $0.28 per share dividend and providing a positive outlook for 2025.
Executive/Board ChangesBusiness Operations and Strategy
Simpson Manufacturing Co Appoints Angela Drake as Director
Positive
Jan 3, 2025
Simpson Manufacturing Co. has appointed Angela Drake as an independent director, effective January 1, 2025. Ms. Drake’s extensive experience in financial leadership at leading manufacturing companies is expected to strengthen Simpson’s strategic planning and growth initiatives, as she joins the Audit and Finance and Compensation and Leadership Development Committees.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.