Market Overview

Longbow: 5 Reasons To Like Interface

Share:
Longbow: 5 Reasons To Like Interface

Shares of carpetmaker Interface, Inc. (NASDAQ: TILE) are trading at an attractive valuation, and any concerns tied to its second-quarter earnings report are overblown, according to Longbow Research. 

The Analyst

Longbow's David MacGregor upgraded Interface from Neutral to Buy with a newly established $30 price target.

The Thesis

The bullish case for Interface's stock is based on five factors, MacGregor said in the upgrade note. (See the analyst's track record here.) 

They are: 

  • Organic orders rose 9.7 percent year-over-year in the second quarter to $290.9 million, which implies continued momentum after 8-percent growth in the fourth quarter of 2017 and 12.1 percent in the first quarter 2018.
  • Investor concern over a fall in gross margins in Q2 can be attributed to transitory issues, including delayed productivity initiatives and a negative mix shift from the lower-margin Interface Services business.
  • The company's LVT business should grow at 100 percent in 2018 and again in 2019, and the premium margin product should translate to topline growth.
  • The acquisition of Nora Systems should be accretive to fiscal 2018 earnings per share by 3-6 cents and positively impact 2019 gross margins.
  • The stock is trading at a P/E multiple of 13.9 times and EV/EBITDA multiple of 8.8 times versus the five year P/E average multiple of 17 times and EV/EBITDA multiple of 9.2 times.

Price Action

Interface shares were trading up 3.9 percent to $23.28 at the time of publication Tuesday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For August 14, 2018

Interface Downgraded By Raymond James On Brexit Risks

Latest Ratings for TILE

DateFirmActionFromTo
Oct 2019DowngradesBuyNeutral
Jan 2019MaintainsBuyBuy
Aug 2018UpgradesNeutralBuy

View More Analyst Ratings for TILE
View the Latest Analyst Ratings

Posted-In: Carpet David MacGregor Longbow ResearchAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (TILE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ABBBarclaysInitiates Coverage On
DPLOWilliam BlairUpgrades
SUPVItau BBADowngrades
GGALItau BBADowngrades
BMAItau BBADowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Baird Downgrades Urban Outfitters On Valuation, Not Execution

Truett-Hurst Shares Jump On $18M Sale Of Wine Business