We came across a bullish thesis on Janus International Group Inc. (JBI) on Substack by Leahi Capital. In this article, we will summarize the bulls’ thesis on JBI. Janus International Group Inc. (JBI)’s share was trading at $7.74 as of Dec 12th. JBI’s trailing and forward P/E were 10.75 and 17.64 respectively according to Yahoo Finance.
Customers accessing their separate self-storage facilities in a secure commercial warehouse.
Janus International, a leading provider of products and services for the self-storage industry, is navigating through a challenging period with shares currently 51% below their February highs following weaker-than-expected results in June and September. Despite this setback, the company remains a market leader with a moderate competitive moat, presenting a compelling opportunity for investors amid a cyclical downturn. With a market cap of $1,105 million and a share price of $7.83, Janus has strategically positioned itself as a solutions provider, leveraging its expertise to integrate planning and design into projects, ensuring deep customer engagement and loyalty.
Founded in 2002, Janus has evolved significantly, expanding from manufacturing self-storage doors to offering a diversified product suite including smart entry systems, relocatable storage units, and door operating systems. The company has established three primary revenue streams: new construction (37%), restore-rebuild-replace (31%), and commercial and other sectors (32%), with North America accounting for 93% of its revenue. Its flagship product, the Noke smart entry system, has been installed in approximately 350,000 units, further cementing its leadership in the market. The diversified customer base and superior lead times have enabled Janus to achieve healthy returns, with average ROIC of 14% and gross margins ranging from 34% to 42%.
While Janus faces competition from smaller players such as MakoRabco and broader companies like Overhead Door Corporation, its market share of over 50% underscores its dominant position. Competitors remain significantly smaller in scale, with Janus benefiting from its integration into customer projects and pricing power due to its products’ critical role in facility operations. Additionally, its limited capex needs (approximately 2% of sales) contribute to strong cash flow generation.
Recent trends reflect macroeconomic challenges, with the self-storage industry reducing investment due to higher interest rates and economic uncertainty. Janus revised its 2024 revenue guidance to $910-925 million, down from ~$1.1 billion, and adjusted EBITDA to $195-205 million from $286-310 million. However, long-term prospects remain promising, particularly in the R3 segment. With approximately 60% of existing units over 20 years old and lacking modern features like climate control or smart entry systems, this segment represents a substantial growth opportunity.
Despite near-term headwinds, Janus’ resilient business model, strong margins, and leadership position in a critical industry segment make it an attractive investment. The current valuation, coupled with long-term growth prospects in the R3 and smart systems market, offers a favorable risk/reward profile for investors willing to navigate short-term volatility.
Janus International Group Inc. (JBI) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held JBI at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of JBI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JBI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.