DA Davidson Initiates Coverage on Miller Industries (NYSE:MLR) with Buy Rating and $82.00 Price Target
On Tuesday, renowned investment firm DA Davidson started coverage on Miller Industries, the leading player in the tow truck market, with a positive outlook. The firm issued a Buy rating for the company's stock and set a price target of $82.00. Miller Industries, known as the original inventor of the tow truck, has experienced significant growth, with sales exceeding $1.2 billion and a CAGR of around 14% over the past 25 years.
DA Davidson pointed out the company's strong performance, crediting factors such as the growing number of vehicles on the road, denser urban populations, increased vehicular travel, and a rise in repossessions due to missed car payments. These elements have fueled Miller Industries' expansion and helped it maintain its market leadership position.
Although DA Davidson does not anticipate the same level of growth going forward, they highlight Miller Industries' robust FCF yield, which is over 10%. This indicates that the company offers a valuable opportunity for GARP investors who seek strong growth prospects at reasonable valuations.
The initiation of coverage by DA Davidson sheds light on Miller Industries' overlooked status in the market, as the company has not been covered by sell-side analysts for years. This move could bring fresh attention to the stock.
In conclusion, DA Davidson's initiation of coverage on Miller Industries underscores confidence in the company's continued growth and its potential as a stable investment within the Machinery sector.
Analysis:
DA Davidson's positive outlook on Miller Industries aligns with InvestingPro data, which supports the notion that MLR may be undervalued. With a low P/E ratio of 9.55 and a PEG ratio of 0.11, the stock presents a GARP opportunity. The company's financial health is robust, with strong revenue and EBITDA growth, as well as consistent dividend payments for 15 years.
Despite historical growth, Miller Industries has further potential for expansion, as indicated by its current market cap of $688.6 million and the InvestingPro Fair Value of $73.49, which closely matches DA Davidson's price target. Investors seeking a comprehensive analysis can explore additional tips from InvestingPro for further insights into the company's investment potential.
Overall, the initiation of coverage on Miller Industries highlights a promising opportunity for investors looking for growth potential and stability in the Machinery sector.