Mayville Engineering Company, Inc. (NYSE: MEC)

Sector: Industrials Industry: Metal Fabrication CIK: 0001766368
Market Cap 443.82 Mn
P/B 1.81
P/E 36.32
P/S 0.83
ROIC (Qtr) 4.68
Div Yield % 0.00
Rev 1y % (Qtr) 6.59
Total Debt (Qtr) 245.66 Mn
Debt/Equity (Qtr) 1.00
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About

Investment thesis

Bull case

  • Operating cash flow of 63.14M provides strong 14.71x coverage of stock compensation 4.29M, indicating sustainable incentive practices.
  • Strong operating cash flow of 63.14M provides 1.69x coverage of SG&A expenses 37.45M, showing efficient operational cost management.
  • Robust free cash flow of 52.67M exceeds capital expenditure of 10.47M by 5.03x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 330.95M provides 5.15x coverage of working capital 64.26M, indicating strong operational backing.
  • Tangible assets of 330.95M provide robust 18.07x coverage of other current liabilities 18.31M, indicating strong asset backing.

Bear case

  • Operating cash flow of 63.14M barely covers its investment activities of (150.54M), with a coverage ratio of -0.42, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 1.22M against inventory of 65.86M, the 0.02 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 1.22M provide limited coverage of acquisition spending of (140.06M), which is -0.01x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 24.75M show weak coverage of depreciation charges of 45.35M, with a 0.55 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 45.35M relative to operating cash flow of 63.14M, which is 0.72x suggests significant maintenance capital requirements affecting free cash flow.

Consolidation Items Breakdown of Revenue (2024)

Industry Sector Breakdown of Revenue (2024)

Peer comparison

Companies in the Metal Fabrication
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ATI Ati Inc 20.40 Bn 45.86 4.45 1.91 Bn
2 CRS Carpenter Technology Corp 18.78 Bn 45.38 6.49 0.69 Bn
3 MLI Mueller Industries Inc 13.25 Bn 20.13 3.33 0.03 Bn
4 ESAB ESAB Corp 8.11 Bn 30.60 2.96 1.34 Bn
5 WOR Worthington Enterprises, Inc. 4.07 Bn 25.93 1.54 0.35 Bn
6 PRLB Proto Labs Inc 1.57 Bn 106.06 3.04 0.00 Bn
7 RYI Ryerson Holding Corp 0.89 Bn 7.72 0.16 0.86 Bn
8 IIIN Insteel Industries Inc 0.72 Bn 15.23 1.07 0.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.93 1.76
EV to Cash from Ops. EV/CFO 8.61 24.33
EV to Debt EV to Debt 2.21 75.42
EV to EBIT EV/EBIT 21.96 12.80
EV to EBITDA EV/EBITDA 7.75 -130.25
EV to Free Cash Flow [EV/FCF] EV/FCF 10.32 70.90
EV to Market Cap EV to Market Cap 1.22 0.24
EV to Revenue EV/Rev 1.02 1.91
Price to Book Value [P/B] P/B 1.81 3.80
Price to Earnings [P/E] P/E 36.32 22.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.28
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 40.29
Dividend per Basic Share Div per Share (Qtr) 0.00 0.30
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 265.01
Interest Coverage Int. cover (Qtr) 2.94 618.70
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 35.03 29.14
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 583.71 42.29
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -19.27 -10.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 1.45 118.55
EBIT Growth (1y) % EBIT 1y % (Qtr) -7.87 -10.94
EBT Growth (1y) % EBT 1y % (Qtr) 14.07 -12.52
EPS Growth (1y) % EPS 1y % (Qtr) 1.72 -38.14
FCF Growth (1y) % FCF 1y % (Qtr) -15.59 28.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -29.09 17.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.91 0.97
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.08
Cash Ratio Cash Ratio (Qtr) 0.02 0.67
Current Ratio Curr Ratio (Qtr) 1.82 2.58
Debt to Equity Ratio Debt/Equity (Qtr) 1.00 0.60
Interest Cover Ratio Int Coverage (Qtr) 2.94 618.70
Times Interest Earned Times Interest Earned (Qtr) 2.94 618.70
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.10 6.15
EBIT Margin % EBIT Margin % (Qtr) 4.64 2.67
EBT Margin % EBT Margin % (Qtr) 3.06 1.83
Gross Margin % Gross Margin % (Qtr) 10.40 26.31
Net Profit Margin % Net Margin % (Qtr) 2.30 0.14