Atkore (US:ATKR) Forbesยท2024-11-25 15:41Stock Performance and Market Context - Atkore's stock price rose 5% on November 22, rebounding from a 52-week low of $76, despite a mixed Q4 report and a dismal fiscal 2025 outlook [1] - The stock has declined 20% from early 2023 levels of around $113 to $90, primarily due to an 18% revenue drop from $3 9 billion in 2022 to $3 2 billion in 2024 and a 19% fall in the P/S ratio to 1 0x [1] - ATKR stock has underperformed the broader market with a 43% decline this year, compared to the S&P500's 25% rise, despite generating better returns than the market in the previous three years (170% in 2021, 2% in 2022, and 41% in 2023) [4] Financial Performance and Revenue Trends - Atkore's revenue decline is attributed to lower price realization, with average selling prices plunging 16 5% in 2023 and 11 5% in 2024, despite higher volumes [2] - Operating income halved from $1 2 billion in 2022 to $0 6 billion in 2024, with operating margins declining from 31 5% to 19 5% [2] - Q4 sales were $788 million, a 9% y-o-y decline but above the consensus estimate of $748 million, with Electrical sales down 13 1% and Safety & Infrastructure sales up 2% [3] Valuation and Growth Potential - ATKR stock is trading at 1 0x trailing revenues, below its three-year average P/S ratio of 1 6x, suggesting room for growth [5] - The company has a strong cash position of $3 5 billion, with debt under $1 billion, a debt-to-equity ratio of 30%, and cash representing 12% of assets [5] - Analysts' average price estimate of $101 reflects a 12% upside from current levels, supported by expected steel price rebounds from 2026 and continued share repurchases [5] Industry and Commodity Price Impact - Atkore's performance is closely linked to commodity prices, particularly steel, copper, and resin, with steel prices declining since 2021 due to weak demand from China [2] - The company faces continued pricing pressure, guiding for fiscal 2025 sales in the range of $2 9 billion to $3 2 billion [3]