Description

A strong company where the stockprice has heavily discounted a decline in the constructions-market. 
Inwido ownes decentralized local companies that sells and renovated windows and doors. They operate in scandinavia, east,west and mid europe. 

Covid meant some problems with meating the customer and some factories shutting down, however, people also stayed at home and spent more on their houses. The last 2 years has been good for sure, but not extremely spectacular. Kicker is a potential ESG profile with energy savings, the company is doing a great job with IR and branding which could help the ESG approach in valuation and capital flows to the company. The energy savings can for sure be a hedge to the potentially coming market downturn.

They have a history of doing acquisitions to increase growth. With net debt to operating ebitda at 1 and the sector moving down in price this opens up for deals to further fuel the coming years.    

EV/EBIT with it’s low debt is 7,3.

Inwido is currently trading at P/E 7,8 TTM. A drastic decline in profits has been priced in the stock, the stock has dropped from it’s highs at 180sek/share to 101sek/share, with still only good quarters. Last Q2 was very strong, however, they said they are seeing a decline in the end of Q2. Margins are also to be followed closely. Likely, both margin and turnover will decrease. However, the market might have priced the stock too low. 
Looking at the 5year average turnover and a lower profit-margin (7,5%) that gives an EPS at 9,4 at PE 14, 132sek /share is motivated. So a 30% upside to an average turnover drop 15% and margin drop from 9% to 7,5%. 
Short term EPS might decline more however, perhaps to 6-7,5sek/share. At PE 14 that gives about 80-100sek/share. With a more depressed PE offcourse we could move lower. Looking at the last 2 years however, 200sek/share could be easily motivated coming out of this potential downturn. 

I believe that, looking at the companies history, it’s future potential & average hedged earnings the market has priced the company too low. A few bad quarters is likely to come, but the price is discounted too far already.  

Eps cagr last 10 years is 17%. EBIT margin at 11,4% last quarter from 7% 10years ago. A strong CEO with good history and shareholder-focus. Long history of steadily increasing profitability. The market is very fragmented. Inwido has the largest market share in Europe, with just a few percent, showing their skill and understandin of the market, keeping all acquisitions very decentralized and local for the customer. The acquired company gets to use inwidos network, factories, prices etcetera. Inwido at 6000m sek in market cap still has room to grow.

Catalyst

Earnings growth