Freedom Broker has downgraded its rating for Miller Industries, a manufacturer of towing and recovery equipment, from “buy” to “hold” while reiterating its target price. It cited slowing sales growth but noted improvements in cash flow.
Details
In a note released in late November, Freedom Broker downgraded Miller Industries stock from “buy” to “hold.” Meanwhile, it kept its target price unchanged at $74 per share, below the current market price.
The downgrade was attributed to Miller Industries’ 2024 third-quarter earnings. Specifically, sales growth decelerated, but cash flow improved, mainly due to lower accounts receivable, Freedom Broker explained. In the third quarter, net revenue was up 14.5% year over year at $314.3 million (compared to 33.6% growth in the third quarter of 2023), falling short of Freedom Broker’s $318.0 million forecast.
“Management’s comments suggest that fourth-quarter sales may come under pressure,” the note says. Part of the reason for that was uncertainty surrounding the U.S. presidential election.
As a result, Freedom Broker has cut its fourth-quarter top-line forecast by 2.5% to $314 million, implying 6% year-over-year growth.
Freedom Broker also points out that Miller Industries stock has already seen strong gains since the beginning of the year, meaning there could be less room to run moving forward. For the year to date, the stock has soared almost 76%.
According to MarketWatch, Miller Industries is covered by two analysts. On November 15, DA Davidson reiterated its “buy” rating with a target price of $82 per share, implying 10% upside versus the last closing price.
For investors
Diluted earnings per share for the third quarter were down 12.3% year over year to $1.33. Still, Miller Industries maintained its quarterly cash dividend of $0.19 per share. The company has now paid dividends for 56 consecutive quarters, Freedom Broker notes, adding that in April, the company approved a $25 million share buyback program, with only $2.9 million of shares repurchased so far.
This summer, InvestorPlace included Miller Industries in a list of three stocks outperforming the small-cap-tracking Russell 2000 index since the start of the year. Simply Wall St has also spotlighted Miller Industries stock as undervalued compared to its peers.
