Stifel, a financial services firm, has adjusted its outlook on Hayward Holdings Inc (NYSE: HAYW), a company specializing in residential pool equipment manufacturing.
The firm raised its price target on the company's shares to $15.50, up from the previous $15.00, while continuing to recommend a Hold rating on the stock.
The revision in the price target is based on assigning a 13 times enterprise value to forecasted fiscal year 2026 earnings before interest, taxes, depreciation, and amortization (EV/FY26E EBITDA) multiple.
The valuation represents a premium compared to other residential-focused equipment manufacturers, which typically trade at a 12 times EV/FY26E EBITDA multiple, and a discount relative to top-tier manufacturers in the same sector, which trade at a 15 times multiple.
In other recent news, Hayward Holdings reported its second-quarter results, revealing a modest year-over-year increase in net sales. The company also noted its sixth consecutive quarter of gross margin expansion, reaching a record 51%. Operational cash flow saw an uptick of 26% compared to the first half of the previous year, while net leverage was effectively reduced. The company's recent acquisition of ChlorKing is expected to enhance its position in the commercial pool market.
For the full year 2024, Hayward anticipates a net sales growth of 2% to 5% and an adjusted EBITDA increase of 3% to 9%. The company also expects net sales for the fiscal year 2024 to range between $1.01 billion and $1.04 billion, with adjusted EBITDA projected to be between $255 million and $270 million.
Despite a 6% decrease in net sales in the European and Rest of World markets due to lower volumes, North American net sales grew by 2%, driven by favorable pricing. The company's strong cash flow performance and significant balance sheet improvement were also highlighted.
InvestingPro Insights
Following Stifel's recent update on Hayward Holdings Inc (NYSE: HAYW), additional insights from InvestingPro reinforce the company's strong financial position. With impressive gross profit margins of 49.43% in the last twelve months as of Q2 2024, Hayward Holdings showcases its ability to maintain profitability. This is further underscored by the fact that analysts predict the company will be profitable this year, a sentiment reflected in the company's positive operating income margin of 19.03%.
While Hayward Holdings is trading at a high earnings multiple, with a P/E ratio of 35.08, its liquid assets exceed short-term obligations, indicating a solid liquidity position. It's also worth noting that the company operates with a moderate level of debt, which may provide some financial flexibility. The market has recognized these attributes, as evidenced by the stock trading at 91.52% of its 52-week high and a fair value estimate by analysts at $15.50, closely aligned with Stifel's revised price target.
For investors looking to delve deeper into Hayward Holdings' financials, InvestingPro offers additional tips and metrics that provide a comprehensive understanding of the company's valuation and performance. To explore further, investors can visit https://www.investing.com/pro/HAYW, where more than eight InvestingPro Tips are available to help in making informed investment decisions.
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