SLCA - U.S. Silica Has Upside To Sum Of The Parts Valuation In A Potential Split
2024-07-02 12:53:20 ET
Summary
- U.S. Silica has been investing in new technology in its Industrial business for several years and has guided to 8-10% profit growth for the next few years.
- The Industrial segment, alone could be worth $25/share based on the guidance and a peer multiple of 12x EV/EBITDA.
- The complicating factor is the Oil & Gas business is more volatile and weighs down the overall valuation even though it is worth only about $7/share at 3x EV/EBITDA.
- Apollo has proposed buying the company for $15.50/share or an 18% premium. However, long-term investors could benefit far more by forgoing the meager premium and opting for a split.
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U.S. Silica Has Upside To Sum Of The Parts Valuation In A Potential Split