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Summit Materials - don t just look at growth
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i4value
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31-May-2023 10:05
Yells: "i4value.asia" |
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Summit Materials is a US construction materials supplier that had achieved tremendous growth over the past 8 years as can be seen from the chart. &zwnj 
The market price as of 21 Apr 2023 was USD 27 per share compared to its Book Value of USD 17 per share. Normally with a high PBV you would associate it with a growth stock. But digging deeper, I found that it was a growth trap. &zwnj In the first place, revenue growth was due to a combination of organic and acquisition growth. About only 1/3 of revenue growth came from organic growth. This meant that the bulk of the revenue growth was via acquisitions. Revenue growth also did not translate into better operating performance. Without the one-off gains, current ROE would be in single digits. I am a long term fundamental investor looking for value stocks. I don' t think Summit fits the bill. If you want more insights into stock opportunities, go to Are these outstanding stocks - what to consider? (Other Stock Exchanges) |
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