VIRC - Virco Tailwinds Are Not Structural And The Stock Is A Hold

2024-02-15 07:19:43 ET

Summary

• Virco has experienced record-breaking revenue levels and multiplied earnings, leading to a more than 100% increase in stock price since last year.
• The company attributes its success to competitive parity with Chinese imports.
• I believe that VIRC's recent performance is an outlier and not indicative of a permanent shift in the competitive landscape, making it a hold.

Virco ( VIRC ) is a leading educational furniture manufacturer from the US.

I wrote about Virco in February 2023 , considering the stock a Hold. Back then, I believed that Virco's recent tailwinds (mostly high shipping costs from China) did not guarantee a long-term investment in the company.

Since then, the company has continued to post record-breaking revenue levels, which, leveraged by its fixed cost structure (manufacturing facilities), have multiplied its earnings. The stock has appreciated more than 100% since my article....

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