Simpson Manufacturing: Too Little Margin Of Safety To Be ‘Wonderful’

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Simpson Manufacturing ($NYSE:SSD) is a ‘wonderful’ company that produces a variety of products ranging from automotive parts to industrial machinery. Despite its strong performance and potential for growth, Simpson Manufacturing may not be as ‘wonderful’ as it seems as it fails to provide a sufficient margin of safety. This means that although Simpson Manufacturing has been a reliable and successful business, it may not be able to sustain its performance in the long run if adverse circumstances arise. The margin of safety is an important indicator of the stability of any business. It provides investors with an assurance that the company has a higher barrier to entry and can remain profitable even if the market turns sour. Unfortunately, Simpson Manufacturing does not provide this assurance as its margin of safety is too low. This means that the company’s stock may become volatile and its share price may suffer sharp declines if the business does not quickly improve its security.

However, its low margin of safety means that although it can be a reliable and successful business in the short term, it may not be able to sustain its performance in the long run if adverse circumstances arise. Therefore, investors should carefully evaluate Simpson Manufacturing before investing in the company’s stock.

Price History

Simpson Manufacturing, a large publicly traded company, opened on Thursday at $189.0 and closed at $194.9, up 4.5% from the previous closing price of 186.4. Despite the increase in stock price, some analysts have expressed concern about the company’s margin of safety. They suggest that although the company may look wonderful on paper, its current financial position doesn’t leave much room for error or unexpected expenses. As such, they are not overly optimistic about the stock’s future prospects. Analysts point to the fact that Simpson Manufacturing is carrying a heavy debt load and has minimal cash reserves. This leaves the company vulnerable should economic conditions worsen or the market take an unexpected turn. Furthermore, because the company has so little cushion, any downturn could have a major impact on its profitability. It is for this reason that analysts are not entirely convinced that Simpson Manufacturing is worth investing in at the current price. Ultimately, Simpson Manufacturing may be a great company.

However, given the current market conditions and its lack of margin of safety, some investors may want to exercise caution before investing in the stock. Live Quote…

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Simpson Manufacturing. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Simpson Manufacturing. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Simpson Manufacturing. More…

Key Ratios Snapshot

Some of the financial key ratios for Simpson Manufacturing are shown below. More…

Analysis

Our Star Chart shows that SIMPSON MANUFACTURING is strong in terms of asset, dividend, growth and profitability. Additionally, the Health Score of 10/10 demonstrates that the company is in a strong financial position with the ability to pay off debt and fund future operations. As a result of its strong competitive advantage, we classify SIMPSON MANUFACTURING as a ‘gorilla’ – an indication of stable and high revenue or earning growth. Given these factors, SIMPSON MANUFACTURING is an attractive option for investors looking for a stable investment with long-term growth potential. Furthermore, those investors interested in a reliable dividend income will also be satisfied with SIMPSON MANUFACTURING’s performance. More…

Peers

Simpson Manufacturing Co Inc is one of the largest manufacturers of building materials in the United States. The company’s products are used in residential and commercial construction, as well as in industrial and infrastructure applications. Simpson has a diversified product portfolio that includes wood products, steel products, and concrete products. The company’s products are sold through a network of distributors and retailers. Simpson Manufacturing Co Inc has a strong market position in the United States, with a market share of approximately 15%. Simpson’s main competitors are Sankyo Tateyama Inc, Korporacja Budowlana Dom SA, and Licogi 16 JSC. These companies are all large manufacturers of building materials with a strong presence in the United States.

– Sankyo Tateyama Inc ($TSE:5932)

Sankyo Tateyama Inc is a Japanese company that manufactures and sells pharmaceuticals and medical devices. The company has a market capitalization of 16.87 billion as of 2022 and a return on equity of 0.94%. Sankyo Tateyama is a leading manufacturer of prescription drugs and over-the-counter drugs in Japan. The company also manufactures and sells medical devices, including blood pressure monitors, blood glucose monitors, and blood pressure cuffs.

– Korporacja Budowlana Dom SA ($LTS:0LZA)

Korporacja Budowlana Dom SA is a construction company that operates in Poland. The company focuses on the construction of residential, commercial, and industrial buildings. As of 2022, the company has a market cap of 2.65M and a ROE of 4.11%.

Summary

Simpson Manufacturing (SMM) is a publicly traded company with a strong track record of performance. Despite its strong operating history, the stock price has been volatile in recent months and the margin of safety is not as high as some investors would like.

However, the company has a robust balance sheet, strong cash flow, and solid competitive advantages that should give investors confidence in the long-term prospects of the firm. The current valuation is attractive and provides an opportunity for investors to take a position in the stock at a discount. Analysts have also noted that the company’s recent performance is in line with its historical trends, suggesting investors may benefit from a longer-term view.