SMID - Smith-Midland: Strong 2023 Financial Results And Momentum But Still Expensive

2024-05-29 12:03:43 ET

Summary

• The company’s sales grew by 18.8% year-on-year to $59.58 million in 2023 thanks to strong sales of patented products.
• I’m optimistic that Smith-Midland's revenues for 2024 could surpass $65 million as its sales backlog stood at $60.8 million at the end of 2023.
• However, the company looks overvalued at 47x EV/EBITDA considering it’s operating in a fragmented market with low barriers to entry.
• Short selling seems viable as the short borrow fee rate is just 1.2% but Smith-Midland has been trading at unusually generous multiples for over a year now.

Introduction

I've been keeping tabs on Smith-Midland Corporation ( SMID ), and I've written a total of three articles about the company on SA to date. The latest of them was in December 2023 when I said that the sales backlog was strong, but the company looked expensive at 62.3x EV/EBITDA....

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