IIIN - Insteel Generating Historically Strong Margins With Robust Underlying Demand
- Insteel has been posting record margins as healthy construction demand and limited domestic supply drive strong prices and excellent operating leverage.
- Input cost inflation is a threat, and securing adequate supplies could remain challenging, but I do expect strong margins through the end of this year.
- I expect pricing and spreads to start weakening, though Insteel will still remain quite profitable in terms of margins and FCF relative to historical norms.
- I can see a fair value in the low-to-mid-$40s today, but I'm concerned about the risk of peak spreads/margins even with an improving demand outlook in 2023.
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Insteel Generating Historically Strong Margins With Robust Underlying Demand