4) NN, Inc. (NASDAQ:NNBR)
Average Upside Potential: 79.49%
NN, Inc. (NASDAQ:NNBR) is a diversified industrial company, combining advanced engineering and production capabilities with in-depth materials science expertise to enable the designing and manufacturing of high-precision solutions and components.
The company released its 1Q 2024 earnings print, wherein, its net sales declined 4.6% YoY to come at $121.2 million. This decline was mainly because of non-recurring end-of-life pricing received in 1Q 2023, rationalized volume at plants undergoing turnarounds, and higher organic volume at profitable plants.
Operating loss came in at ($4.8) million against an operating loss of ($7.1) million in the prior-year period. This improvement was mainly because of items related to 2023 facility closures that included sublease income on closed facilities, and one-off losses that took place during 1Q 2023 on sales of machinery and equipment related to these closures.
The leverage ratio of NN, Inc. (NASDAQ:NNBR) as on March 31, 2024 came in at 3.1x, reflecting an improvement from 3.2x at 2023 end. The company expects the leverage ratio to fall below 3.00x by 2024 end.
NN, Inc. (NASDAQ:NNBR) focuses on correcting and improving its balance sheet position. In a bid to achieve this, it sold its lone plastics products plant known as Industrial Molding Corporation (IMC) to Davalor Mold Company, which is a wholly-owned portfolio company of Blackford Capital. With the proceeds, which amount to ~$16 million, NN, Inc. (NASDAQ:NNBR) plans to pay down debt and will continue to advance its balance sheet initiatives.
On 15th April 2024, Noble Financial assumed coverage on shares of NN, Inc. (NASDAQ:NNBR). They gave an “Outperform” rating, and a price target of $6.00 on the stock. According to Insider Monkey’s first-quarter database, 19 hedge funds expressed bullish sentiments towards NN, Inc. (NASDAQ:NNBR), up from 11 in the preceding quarter.
Greystone Capital Management, an investment management firm, released its 1Q 2024 investor letter and mentioned NN, Inc. (NASDAQ:NNBR). Here is what the fund said:
“In keeping with our theme of investing in companies that cease doing dumb things, two new positions that made their way into the portfolio this quarter include Innovative Food Holdings and NN, Inc. (NASDAQ:NNBR). Each business possesses the criteria of being a better business than currently being given credit for, has undergone significant changes in the C-Suite, and has many common-sense items to address that will help reveal each company’s core business quality over time. In other words, plenty of one-foot bars.
For readers in the habit of using quantitative screens to identify investment ideas, NN will likely cause you to turn the other cheek. At first glance, this business does not look pretty. Under the hood, there is a lot to like. The fact patterns here along with management efforts are very similar to our investment in Bel Fuse. Like Bel Fuse, NNBR possesses strong technical expertise, a large manufacturing footprint, and long-dated customer relationships. Also, like Bel Fuse, NN was historically mismanaged, which shows up in the areas of pricing, manufacturing overhead, and new business wins. (Click here to read the full text)”
