Preformed Line Products (PLPC): Assessing Valuation After First Dividend Increase Since 2001 Listing

Preformed Line Products (PLPC) just gave income focused investors something new to consider, approving a 5% hike to its quarterly dividend, the first increase since the company listed in 2001.

See our latest analysis for Preformed Line Products.

The move lands after a strong run, with the latest share price at $231.5 and an impressive year to date share price return of about 80%. The five year total shareholder return of roughly 267% shows that long term momentum has been firmly building.

If this kind of rerating has caught your attention, it could be a good moment to see what else is gaining traction and explore fast growing stocks with high insider ownership

Yet with PLPC now trading above analyst targets after an 80% year to date surge, investors have to ask: is this quietly compounding industrial still undervalued, or is the market already pricing in years of future growth?

Price-to-Earnings of 30.4x: Is it justified?

On a price-to-earnings ratio of 30.4 times at the last close of $231.5, Preformed Line Products screens only slightly cheaper than many peers, hinting that investors are already paying up for its earnings power.

The price to earnings multiple compares what investors pay today for each dollar of current earnings, a key yardstick for mature, profitable industrials like PLPC. At 30.4 times, the market is ascribing a premium that reflects expectations for future profit growth rather than treating the company as a low growth utility like asset.

Relative to the broader US Electrical industry average of 31.4 times, PLPC trades at a small discount, suggesting the market is not wildly overpaying when viewed against sector norms. However, when set against the SWS estimated fair price to earnings ratio of 25 times, the current multiple looks stretched, implying the share price may need earnings to catch up if it is to avoid a de rating toward that lower level.

Explore the SWS fair ratio for Preformed Line Products

Result: Price-to-Earnings of 30.4x (OVERVALUED)

However, investors should weigh risks such as a potential de rating if growth slows, as well as margin pressure from rising input costs across its global footprint.

Find out about the key risks to this Preformed Line Products narrative.

Another View of Value

Our DCF model paints a cooler picture, with fair value closer to $184.64, so the current $231.5 price screens as overvalued by around 25%. If cash flows do not grow as strongly as hoped, today’s optimism could become tomorrow’s downside risk.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Preformed Line Products for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 904 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Preformed Line Products Narrative

If you see things differently or want to dig into the numbers yourself, you can build a personalised view in just minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Preformed Line Products.

Ready for your next investing move?

Before you move on, consider reinforcing your momentum by lining up your next opportunities with screeners designed to surface clear, data backed ideas in seconds.

• Explore potential mispricings with these 904 undervalued stocks based on cash flows, focusing on opportunities that appear inexpensive relative to their cash flows while still reflecting solid business fundamentals.
• Prepare for the next wave of automation by scanning these 25 AI penny stocks that are building real products around machine learning and intelligent software.
• Support your income strategy by reviewing these 12 dividend stocks with yields > 3%, which highlight stocks that combine meaningful yields with the potential for long term capital growth.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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