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Why Sidoti Rated Drew Industries a ‘Buy’

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Price movement

Drew Industries (DW) has a market cap of $2.7 billion. It fell 1.0% to close at $110.15 per share on December 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.69%, 6.9%, and 83.9%, respectively, on the same day. DW is trading 2.6% above its 20-day moving average, 12.2% above its 50-day moving average, and 28.7% above its 200-day moving average.

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Related ETF and peers

The Vanguard Small-Cap ETF (VB) invests 0.07% of its holdings in Drew Industries. The YTD price movement of VB was 18.3% on December 22.

The market caps of DW’s competitors are as follows.

  • Thor Industries (THO): $5.3 billion
  • Berkshire Hathaway (BRK.A): $410.9 billion

DW’s rating

On December 22, 2016, Sidoti initiated coverage of Drew Industries with a “buy” rating.

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3Q16 performance

Drew Industries reported 3Q16 net sales of $412.4 million—a YoY (year-over-year) rise of 19.4%, compared to its net sales of $345.3 million in 3Q15. The company’s gross profit margin and operating margin expanded 410 basis points and 300 basis points, respectively, YoY in 3Q16.

Its net income and EPS (earnings per share) rose to $29.8 million and $1.19, respectively, in 3Q16, as compared to $17.3 million and $0.70, respectively, in 3Q15.

DW’s inventories fell 9.8% YoY in 3Q16. It reported cash and cash equivalents of $95.1 million in 3Q16, compared to $7.3 million in 3Q15. Its current ratio rose to 2.4x, and its debt-to-equity ratio fell to 0.46x in 3Q16, compared to a current ratio and a debt-to-equity ratio of 2.2x and 0.60x, respectively, in 3Q15.

Next, we’ll look at Cal-Maine Foods (CALM).

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