Chicago, Illinois – Atkore Inc., a company listed on the New York Stock Exchange as ATKR, has seen significant growth since its IPO in 2016, primarily driven by spikes in product prices in 2022 and 2023. However, with prices now on the decline, concerns arise regarding the company’s future performance.

Prior to the price spikes, Atkore maintained profitability with returns surpassing its cost of funds, indicating a strong financial position. Despite this, the current market price does not offer enough margin of safety to consider Atkore as a lucrative investment opportunity.

Atkore’s business comprises two main product categories – electrical raceways and mechanical products & solutions. The company has reorganized its reporting segments into the Electrical and Safety & Infrastructure segments, with the Electrical segment being the primary revenue and EBITDA contributor.

Over the past nine years, the Electrical segment has shown significant revenue growth, outpacing the Safety & Infrastructure segment. However, it is essential to note that the adjusted EBITDA margin for the Safety & Infrastructure segment has declined over the years.

A key aspect of Atkore’s growth strategy has been acquisitions, as stated by the company itself. Despite the positive financial performance, the company’s reliance on price spikes for growth raises concerns about the sustainability of its success.

Market demand for Atkore’s products, particularly in the cable tray market, is not expected to experience high growth rates. This could impact the company’s ability to maintain its current growth trajectory without continued acquisitions.

From a financial standpoint, Atkore appears to be in a sound position, with a manageable debt-capital ratio and positive cash flow from operations. However, the company’s heavy reliance on acquisitions and external price factors may pose risks to its long-term stability and performance.

Overall, while Atkore demonstrates financial soundness and profitability, the underlying reliance on price spikes for growth raises questions about the company’s future prospects. Without a sufficient margin of safety at the current market price, some investors may view Atkore as a risky investment opportunity.