4. Simpson Manufacturing Co., Inc. (NYSE:SSD)
Number of Hedge Fund Holders: 17
Simpson Manufacturing Co., Inc. (NYSE:SSD) specializes in the design, engineering, manufacturing, and sale of wood and concrete construction products. Their product offerings include a range of wood construction products such as connectors, truss plates, fastening systems, shear walls, and pre-fabricated lateral systems for use in light-frame construction. Additionally, it offers various connectors and supplementary items for wooden framing, timber and offsite construction, structural steel construction, and applications involving cold-formed steel. It is one of the best land and timber stocks to monitor.
On April 27, Simpson Manufacturing Co., Inc. (NYSE:SSD) declared a $0.27 per share quarterly dividend, a 3.8% increase from its prior dividend of $0.26. The dividend is payable on July 27, to shareholders of record on July 6.
Baird analyst Timothy Wojs increased Simpson Manufacturing Co., Inc. (NYSE:SSD)’s price target to $140, up from $125, while maintaining an Outperform rating on the shares. The analyst noted that Simpson Manufacturing Co., Inc. (NYSE:SSD) had a strong quarter and raised their full-year EBIT guidance, which could potentially exceed expectations and result in a significant boost to our estimates.
According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Simpson Manufacturing Co., Inc. (NYSE:SSD), compared to 20 funds in the earlier quarter. John W. Rogers’ Ariel Investments is the largest stakeholder of the company, with 629,419 shares worth $69 million.
Heartland Opportunistic Value Equity Strategy made the following comment about Simpson Manufacturing Co., Inc. (NYSE:SSD) in its Q4 2022 investor letter:
“These are companies like Simpson Manufacturing Co., Inc. (NYSE:SSD), which designs and manufactures connectors and fasteners used in new construction. Simpson dominates the domestic wood connector market, controlling roughly 75% share thanks to the company’s high value add. If a structural connector fails, the building is uninhabitable, yet Simpson products typically account for <0.5% of a building’s construction cost. As a result, the company enjoys pricing power and a long-term median operating margin (earnings before interest and taxes, or EBIT, divided by sales) of 17%, versus 12% for its Building Product industry peers. But the stock was down around 45% through late October, as investors grew concerned about a housing recession. Simpson’s earnings will be down significantly in 2023; however, we believe the stock is undervalued relative to normalized earnings. Longer term, the rise in building code requirements should result in more demand for SSD connectors per unit of construction.
When we purchased SSD, the stock was trading at a price/earnings ratio of around 12 based on forecasted earnings over the next 12 months. That was well below Simpson’s long-term median valuation of 21 times earnings. Today, the shares are trading at 16 times earnings for the next 12 months, after analysts cut their fiscal 2023 forecast by around 20% since the end of the third quarter.”
