Tredegar Corp (NYSE: TG)

Sector: Industrials Industry: Metal Fabrication CIK: 0000850429
Market Cap 297.56 Mn
P/B 1.47
P/E -5.53
P/S 0.51
ROIC (Qtr) 0.08
Div Yield % 0.00
Rev 1y % (Qtr) 33.49
Total Debt (Qtr) 63.32 Mn
Debt/Equity (Qtr) 0.31
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About

Tredegar Corporation, often referred to as TG, is a dominant player in the manufacturing industry, specializing in aluminum extrusions, polyethylene (PE) plastic films, and polyester (PET) films. The company conducts its operations through three main segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films. The Aluminum Extrusions segment is responsible for the production of high-quality, soft and medium strength alloyed aluminum extrusions. These are custom fabricated and finished for various markets, including building and construction,...

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Investment thesis

Bull case

  • Strong operating cash flow of 36.72M provides robust 0.58x coverage of total debt 63.32M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 13.29M provide 5.67x coverage of short-term debt 2.35M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 350.35M provides 5.53x coverage of total debt 63.32M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 36.72M provides strong 15.92x coverage of stock compensation 2.31M, indicating sustainable incentive practices.
  • Robust free cash flow of 22.73M exceeds capital expenditure of 13.99M by 1.62x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 36.72M barely covers its investment activities of 50.47M, with a coverage ratio of 0.73, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 13.29M against inventory of 62.01M, the 0.21 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 13.29M provide limited coverage of acquisition spending of 64.47M, which is 0.21x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 36.72M provides minimal -225.29x coverage of tax expenses of (163000), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of (56.04M) show weak coverage of depreciation charges of 22.11M, with a -2.53 ratio indicating high capital intensity and potential reinvestment needs.

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 0.96 1.76
EV to Cash from Ops. EV/CFO 9.93 24.33
EV to Debt EV to Debt 5.76 75.42
EV to EBIT EV/EBIT -6.51 12.80
EV to EBITDA EV/EBITDA 16.29 -130.25
EV to Free Cash Flow [EV/FCF] EV/FCF 16.05 70.90
EV to Market Cap EV to Market Cap 1.23 0.24
EV to Revenue EV/Rev 0.62 1.91
Price to Book Value [P/B] P/B 1.47 3.80
Price to Earnings [P/E] P/E -5.53 22.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 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) 26.89 618.70
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.70 29.14
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 101.75 42.29
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -110.74 -10.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 194.34 118.55
EBIT Growth (1y) % EBIT 1y % (Qtr) 2.09 -10.94
EBT Growth (1y) % EBT 1y % (Qtr) 8.97 -12.52
EPS Growth (1y) % EPS 1y % (Qtr) -100.00 -38.14
FCF Growth (1y) % FCF 1y % (Qtr) 187.49 28.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.89 17.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.55 0.97
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.08
Cash Ratio Cash Ratio (Qtr) 0.13 0.67
Current Ratio Curr Ratio (Qtr) 1.67 2.58
Debt to Equity Ratio Debt/Equity (Qtr) 0.31 0.60
Interest Cover Ratio Int Coverage (Qtr) 26.89 618.70
Times Interest Earned Times Interest Earned (Qtr) 26.89 618.70
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -5.80 6.15
EBIT Margin % EBIT Margin % (Qtr) -9.52 2.67
EBT Margin % EBT Margin % (Qtr) -9.16 1.83
Gross Margin % Gross Margin % (Qtr) 18.50 26.31
Net Profit Margin % Net Margin % (Qtr) -9.10 0.14