Post by
microcaphobby on Jun 19, 2023 9:38am
ADF highlighted today by INK research
On Monday, we published the INK Edge Top 40 Report for June. The report contained one of the most diverse sets of names we have seen in a long time. However, Basic Materials still managed to remain the dominant sector with 15 names, including heavy steel products maker ADF Group (DRX) which grabbed the top spot. The stock of the Quebec-based company is up 125% over the past year on the back of rising revenues and fatter margins. Q1 (ended April 30th) revenue came in at $80.27 million compared to $60.0 million a year earlier. Gross margin as a percentage of revenue jumped to 16.8% from 12.1% a year earlier. CEO Jean Paschini gives robots some of the credit for the improvement. Commenting on Q1 results, he said, "The addition of robotization and new programmable automated equipment to our fabrication plant in Terrebonne, Quebec, continues to bring increased efficiency, thereby improving our profitability." EPS for the quarter was $0.16, up from $0.13 a year earlier. On a trailing 12-month basis, EPS stands at $0.49 which leaves the stock trading with a trailing P/E of 7.1. Given the modest valuation, investors are not incorporating a lot of growth ahead. However, as of April 30th, ADF Group's order backlog totalled $312.4 million. On May 30th, it announced additional orders from the US worth $142 million in prospective revenue. Meanwhile, in the company's latest presentation, it sees a strong market ahead led by the automotive and pharmaceutical industries and infrastructure. All the talk we hear from economists about an impending recession does not appear to be a concern at ADF. That might help explain why there has been no insider selling over the past year.
Comment by
microcaphobby on Jun 19, 2023 9:54am
What is highly unusual is that INK highlighted the company even though there has been no inside buying or selling in the past year. INK almost always does a rpeort only when there has been buying or selling.