Encore Wire Corp. (WIRE, Financial) is in the electrical equipment and parts business and trades on the Nasdaq with a price-earnings ratio of just 4.78 and a price-book ratio of 1.89. The price-sales ratio also indicates potential value at a low 0.98, as does the price-to-free-cash-flow ratio at 8.50. The company has no long-term debt and the current ratio is a positive 6.70.
According to the company's website, "Encore Wire is a leading manufacturer of copper and aluminum residential, commercial and industrial building wire." The company's NM-B cables, for example, are used to wire homes, apartments and manufactured housing.
In business since 1989 with headquarters in McKinney, Texas, Encore Wire is having a good year, with earnings per share up by 611.90% in its most recently-reported quarter. The EPS record for the past five years shows growth at a 74.30% rate. Wall Street expects that remarkable pace to slow down in the coming year.
The short float in Encore comes to 7.24%, a relatively high figure which means that any rally in price might be powerfully fueled by those who are forced to cover. Note that the stock is lightly traded with an average daily volume of about 278,000 shares.
Investors are paid a $0.08 per share dividend, which comes to an annualized yield of 0.06%.
The daily price chart for Encore looks like this:
Source: StockCharts.com
After peaking at $150 in November of 2021 and dropping down to almost $100 in January 2022, Encore has now recovered to the $125 mark.
The GuruFocus summary of the company’s financials shows five good signs, one medium warning sign and one severe warning sign:
Encore qualifies as a value stock based on the low earnings ratios, the steady pace of earnings growth, the non-existent long-term debt and that fact that a dividend is paid (small, but it shows they're interested). This is the kind of equity that might be appearing now on the screens of investors looking for Benjamin Graham-style opportunities.
