PLPC - Preformed Line Products: Communications End-Market Softness Continuing To Affect Earnings

2024-06-14 02:56:44 ET

Summary

• Preformed Line Products Company saw significant growth in net sales and net profit from fiscal 2019 to 2023, setting new records.
• Despite a record-breaking fiscal year in 2023, a drop in customer demand in the middle of the year has led to reduced sales and earnings in recent quarters.
• Q1 earnings for the current fiscal year saw a 22% decrease in net sales and a significant drop in net income, indicating challenges in cost control and fixed costs.

Intro

We last wrote about Preformed Line Products Company ( PLPC ) in February of 2020 when we eyeing up the ramifications of the stock printing a multi-year low. PLP is an industrial player operating in the Electrical Equipment & Parts industry with 27 operations in 21 different countries. Shares at the time were in the process of delivering a long-term buy signal through the MACD which is an indicator we pay attention to on long-term charts. However, we deemed the stock a 'Hold' until we saw evidence of the bullish crossover taking place in earnest. A few months later once the technicals gave the green light, shares of Preformed Line Products went on a strong sustained move returning over 135% over the past 52 months. This is a sizable return when one takes into account that the S&P returned just over 60% over the same timeframe. A keen GAAP earnings multiple at the time coupled with a strong growth curve provided the ammunition for the sizable gains we have seen in recent years....

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