Atkore: Fundamentals and valuation
Atkore ATKR 0.00%↑ has created tremendous value for shareholders in the seven years since its IPO, increasing tenfold at a 35% CAGR. While much of it has been due to macro tailwinds, the company has a strong management team leveraging its Atkore Business System. Here’s the analysis of the business model:
Explosive growth
Between 2019 and 2022, Atkore saw explosive growth, driven by commodity pricing tailwinds. This drove AEBITDA margins from 15% in 2017 to 34% in 2022. FY 23 and 24 will be negative growth years due to normalization in the pricing structure and resulting margin declines. Over the long term, Atkore is operating in secular growth markets, which are expected to grow above inflation for several reasons outlined in the previous analysis of the business model.
Electrical Conduit and fittings are some of Atkore’s main products. Below, you can see the exponential price increase due to the disruption in the supply chain since the pandemic. This, of course, has been a tailwind for Atkore. Let’s discuss what it means going forward and how to handle the situation as an investor.
