The global thermoplastics market is experiencing significant growth due to rising demand across industries like aerospace, defense, construction, transportation, and electronics. Companies are investing in expanding product offerings and developing new material grades, positioning the industry for sustained growth and innovation.

Possessing a lightweight nature, thermoplastic composites are readily being used in the aerospace sector as well as in the construction of fuel-efficient vehicles in the automotive sector. The global thermoplastic composites market is forecasted to reach $62.62 billion by 2030, growing at a CAGR of 7.8%.

Amid this growth, Core Molding Technologies, Inc. (CMT - Get Rating), a provider of thermoplastic and thermoset structural products, has stood out as a key player in industrial manufacturing. CMT’s shares have surged 6.2% over the past five days, closing the last trading session at $15.52.

Now, let us delve deeper into the factors that could shape CMT’s performance in the near future.

Stable Historical Growth

Over the past three years, CMT has demonstrated consistent growth across key financial metrics. Its revenue and EBITDA grew at a CAGR of 2.1% and 6.1%, respectively. Moreover, net income expanded at a CAGR of 66.5%, whereas its EPS grew at a CAGR of 64.4%.

Robust Financials

For the fiscal 2024 third quarter that ended September 30, CMT’s total net sales came in at $72.99 million. Its operating income was reported to be $3.61 million. Moreover, CMT’s adjusted EBITDA came in at $7.54 million.

The company’s net income and net income per common share amounted to $3.16 million and $0.36, respectively. As of September 30, 2024, CMT’s cash and cash equivalents amounted to $42.35 million, compared to $24.10 million on December 31, 2023.

Optimistic Analyst Estimates

Analysts predict CMT’s revenue and EPS for the fiscal 2025 first quarter (ending March 2025) to come in at $71.01 million and $0.38, respectively. In addition, the company exceeded the consensus revenue and EPS estimates in each of the four trailing quarters, which is impressive.

Looking at the full fiscal year ending December 2025, CMT’s revenue is expected to come in at $285.58 million, whereas its EPS is forecasted to rise 4.9% year-over-year to $1.72.

High Profitability

CMT’s trailing-12-month net income margin of 4.95% is 3.8% higher than the industry average of 4.77%. Its trailing-12-month levered FCF margin stands at 7.65%, 50.8% higher than the industry average of 5.07%.

In addition, the company boasts a trailing-12-month ROCE of 10.96%, which is 95.2% higher than the sector average of 5.61%. Also, the stock’s trailing-12-month ROTA of 7.03% outperforms the industry average of 2.38% by 196%.

Discounted Valuation

CMT is currently trading at a forward EV/Sales of 0.37x, which is 77.1% lower than the industry average of 1.62x. Moreover, the stock’s forward EV/EBIT multiple stands at 6.51, 51.5% lower than the industry average of 13.41x.

Additionally, it has a forward Price/Sales multiple of 0.43, which is 68.2% lower than the industry average of 1.36x. This indicates that CMT is undervalued compared to the broader market, offering potential upside for investors.

POWR Ratings Reflects Optimism

CMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

CMT has an A grade for Value, driven by its discounted valuation metrics relative to the industry average. Moreover, it earned an A grade for Quality, supported by profitability measures that exceeded industry benchmarks. Plus, the stock holds a B grade for Sentiment, which is in line with the optimistic analyst estimates.

CMT has topped the 35-stock B-rated Industrial – Manufacturing industry. Beyond what is stated above, we have also given CMT grades for Momentum, Stability, and Growth. Get all CMT ratings here.

Bottom Line

CMT’s dominance in the industry is apparent with its wide range of offerings concerning thermoplastic and thermoset structural products serving various markets around the globe. With advancements being made in the thermoplastics sector, the company’s growth potential looks good.

Given CMT’s impressive analyst estimates, high profitability, and attractive valuation, now could be the ideal time to consider adding the stock to your portfolio.

How Does Core Molding Technologies, Inc. (CMT) Stack Up Against Its Peers?

Although CMT’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit strong POWR Ratings. So, consider these A (Strong Buy) and B (Buy) rated stocks from the Industrial – Manufacturing industry:

TE Connectivity plc (TEL - Get Rating)

Littelfuse, Inc. (LFUS - Get Rating)

CompX International Inc. (CIX - Get Rating)

To explore more A or B-rated Industrial – Manufacturing stocks, click here.

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CMT shares were unchanged in premarket trading Thursday. Year-to-date, CMT has declined -6.17%, versus a 1.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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