LMB - Limbach Holdings: Margins Showing Strength Expected To Continue Growing Further

2024-07-16 08:29:23 ET

Summary

• Limbach Holdings is experiencing topline weakness due to revenue loss in the GCR segment, targeting ODR revenue share increase to drive EBITDA growth.
• Continued investment in acquisition and new product offerings should drive topline growth in coming years.
• LMB's valuation is currently near its sector median and considering promising long-term prospects, the stock is a decent buy at the current levels.

The Thesis

Moving into 2024, Limbach Holdings (LMB) continues to experience topline weakness due to significant revenue loss in the company's General Contractor Relationships (GCR) segment as a result of its mix-shift strategy. I expect this weakness to continue further in 2024, as the company is targeting its Owner Direct Relationships ((ODR)) revenue share to reach at least 70% in 2024, which is currently near 62%, to drive EBITDA growth in the coming quarters. However, the contribution from the recent acquisition should support the company's topline by partially offsetting the impact of expected revenue loss....

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