The Shyft Group (SHYF), with a market cap valued at $525 million, operates in the specialized realms of vehicle manufacturing, assembly, and uplift for commercial and service vehicle markets. Despite lagging behind broader markets in recent years, the small-cap stock experienced a notable surge in July, registering a remarkable gain of over 41%. However, the stock has witnessed a sharp retreat in August, plummeting by 18% from its annual peak on July 31 as resurgent recession concerns loom.
Following this trajectory, SHYF has effectively filled its post-earnings bull gap, yet it has not yet found stability near short-term support levels.
In the grander scheme of things, the surging demand for battery-powered vehicles is poised to propel The Shyft Group forward, acting as a potent tailwind for the company in the foreseeable future. An exciting journey unfolds as we delve into what propels SHYF’s ascent and whether investing in this small-cap entity at its current valuation makes prudent financial sense.
The Shyft Group’s Q2 Performance:
The Shyft Group witnessed a revenue of $192.8 million in the second quarter of 2024, representing a 14.4% decline compared to the previous year. The company’s adjusted net income contracted from $8.7 million, or $0.25 per share, to $5.3 million, or $0.16 per share, over the last 12 months. Moreover, the company reported an adjusted EBITDA of $12.5 million for the quarter, down from $15.9 million in the corresponding period last year. The consolidated backlog also diminished by 30.5% year-over-year, standing at $354.4 million in contrast to the previous year’s figure of $510.2 million.
During the earnings call, The Shyft Group disclosed the acquisition of Independent Truck Upfitters (ITU), a company specializing in service body and work truck upfitting based in the Midwest. This strategic move is aligned with Shyft’s growth strategy focused on specialty vehicles and infrastructure.
DA Davidson’s Optimism Towards SHYF Stock:
Investment firm DA Davidson holds a bullish outlook on The Shyft Group, asserting that the vocation truck segment is primed for robust expansion. Noteworthy was DA Davidson’s characterization of Shyft’s purchase of ITU as a “home run.” This sentiment was complemented by an upgrade of SHYF from “Neutral” to “Buy,” accompanied by a revised price target of $18, setting a new benchmark in the market for this lesser-known stock.
DA Davidson accentuated Shyft’s thriving Service Body business and the accolade of Super Duty chassis production hitting a 27-year zenith. The firm’s faith in the Service Body segment stems from Ford Motor’s intent to escalate Super Duty production capacity by 25%.
In an exciting May development, The Shyft Group unveiled that FedEx placed an order for 150 Blue Arc EV Trucks. These electric vehicles are slated to be integrated into FedEx’s U.S. pickup and delivery fleet, a pivotal step in the logistics giant’s voyage towards widespread adoption of commercial-grade electric vehicles.
Evaluating the Viability of SHYF Stock:
Among the four analysts tracking SHYF stock, two advocate a “strong buy,” while the remaining two suggest a “hold,” forging a blended consensus of “moderate buy.”
The average 12-month target price for SHYF shares currently stands at $15.33, signaling an uplift of 6.7% from prevailing levels.
Based on consensus earnings forecasts, The Shyft Group is anticipated to heighten its adjusted earnings per share to $1.10 by 2028. Priced at 30 times forward earnings, SHYF could potentially trade at $33 per share, presenting a tantalizing upside of over 100% relative to current market value.