Simpson Manufacturing Co., Inc. (NYSE: SSD)

Sector: Basic Materials Industry: Lumber & Wood Production CIK: 0000920371
Market Cap 9.01 Bn
P/B 9.38
P/E 48.59
P/S 7.29
ROIC (Qtr) 14.20
Div Yield % 0.59
Rev 1y % (Qtr) 6.19
Total Debt (Qtr) 445.81 Mn
Debt/Equity (Qtr) 0.22
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About

Simpson Manufacturing Co., Inc. (SSD) is a prominent player in the construction industry, specializing in the design and production of structural solutions for wood, concrete, and steel connections. These solutions serve to enhance the safety and robustness of various structures, finding application in residential and commercial construction, original equipment manufacturing, and national retail markets. The company's operations span across multiple segments. The Wood Construction segment encompasses connectors, fasteners, and lateral-force resisting...

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Investment thesis

Bull case

  • Strong operating cash flow of 418.77M provides robust 0.94x coverage of total debt 445.81M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 297.30M provide 13.21x coverage of short-term debt 22.50M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 418.77M provides strong 18.43x coverage of stock compensation 22.72M, indicating sustainable incentive practices.
  • Strong tangible asset base of 2.10B provides 4.70x coverage of total debt 445.81M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 259.98M exceeds capital expenditure of 158.79M by 1.64x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 418.77M barely covers its investment activities of (163.67M), with a coverage ratio of -2.56, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (163.67M) provide weak support for R&D spending of 86.67M, which is -1.89x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 418.77M provides thin coverage of dividend payments of (47.36M) with a -8.84 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 297.30M provide limited coverage of acquisition spending of (1.53M), which is -194.19x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 418.77M barely covers operating expenses of (13.08M) with a -32.02 ratio, suggesting thin operational efficiency margins and limited flexibility.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Lumber & Wood Production
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SSD Simpson Manufacturing Co., Inc. 9.01 Bn 48.59 7.29 445.81 Mn
2 UFPI Ufp Industries Inc 6.70 Bn 110.74 2.45 369.26 Mn
3 WFG West Fraser Timber Co., Ltd 5.72 Bn -6.10 1.05 300.00 Mn
4 BCC BOISE CASCADE Co 3.42 Bn -573.80 0.74 512.44 Mn
5 NWGL CL Workshop Group Ltd 0.02 Bn -2.32 1.10 -
6 JCTC Jewett Cameron Trading Co Ltd 0.01 Bn -0.88 0.16 4.23 Mn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.91 1.42
EV to Cash from Ops. EV/CFO 47.69 40.00
EV to Debt EV to Debt 19.90 11.71
EV to EBIT EV/EBIT 35.73 44.23
EV to EBITDA EV/EBITDA 29.87 14.04
EV to Free Cash Flow [EV/FCF] EV/FCF 53.02 62.95
EV to Market Cap EV to Market Cap 0.98 1.23
EV to Revenue EV/Rev 7.18 2.34
Price to Book Value [P/B] P/B 9.38 3.83
Price to Earnings [P/E] P/E 48.59 -70.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 7.27 1.24
Dividend Payout Ratio % Div Payout % (Qtr) 13.70 8.42
Dividend per Basic Share Div per Share (Qtr) 1.14 0.67
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 18.21 -3.42
Interest Coverage Int. cover (Qtr) -397.13 -63.26
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -3.65 4.39
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -12.41 -40.26
Dividend Growth (1y) % Div 1y % (Qtr) 3.64 -21.79
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.64 -3,191.72
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.10 -97.93
EBIT Growth (1y) % EBIT 1y % (Qtr) 8.03 -582.35
EBT Growth (1y) % EBT 1y % (Qtr) 7.46 -587.17
EPS Growth (1y) % EPS 1y % (Qtr) 8.40 -3,370.25
FCF Growth (1y) % FCF 1y % (Qtr) 165.26 -231.19
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.40 -7.21
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.76 1.25
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.08
Cash Ratio Cash Ratio (Qtr) 0.74 0.67
Current Ratio Curr Ratio (Qtr) 3.35 2.96
Debt to Equity Ratio Debt/Equity (Qtr) 0.22 -0.01
Interest Cover Ratio Int Coverage (Qtr) -397.13 -63.26
Times Interest Earned Times Interest Earned (Qtr) -397.13 -63.26
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 24.80 2.25
EBIT Margin % EBIT Margin % (Qtr) 20.04 -8.33
EBT Margin % EBT Margin % (Qtr) 20.09 -9.24
Gross Margin % Gross Margin % (Qtr) 46.00 19.48
Net Profit Margin % Net Margin % (Qtr) 14.90 -9.98