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  5. BYD: It's been a while since we asked about SLP. [Boyd Group Services Inc.]
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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: It's been a while since we asked about SLP. Share price is largely sideways for the past year. What is your assessment of SLP and are we buyers here? I see a debt free company with next year sales and EPS growth of 12% and 21% and average price target ~40% higher than it is now.

What does the market not like?

I'm looking to add a new industrial and BYD and SLP are being considered. Where does your money go?
Asked by Cameron on January 30, 2024
5i Research Answer:

SLP's share price has been largely stagnant over the past few years, while its sales have grown, debt levels remain low, free cash flow has grown or remained flat, and its balance sheet has expanded. Although, its profit margins have slipped from mid- to high-20s over the past several years to 17% over the past 12 months, and its valuation remains elevated at 56X forward earnings. While its fundamentals have grown, its price remaining flat has caused its valuation to contract, albeit still within a relatively high range. Its fundamentals look decent, but it does not generate that much cash flow, is somewhat small ($780M market cap), and trades at a high valuation. Given its high valuation, we would prefer to wait until it improves on earnings beats to add to this name. 

We would prefer BYD here today.

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in SLP.