NasdaqGS:TWIN

Stock Analysis Report

Executive Summary

Twin Disc, Incorporated designs, manufactures, and sells marine and heavy duty off-highway power transmission equipment worldwide.

Rewards

Trading at 69.5% below its fair value

Earnings are forecast to grow 118.01% per year

Risk Analysis

Highly volatile share price over past 3 months

Large one-off items impacting financial results

Profit margins (0.5%) are lower than last year (3.3%)

Shareholders have been diluted in the past year



Snowflake Analysis

Good value with adequate balance sheet.


Similar Companies

Share Price & News

How has Twin Disc's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: TWIN's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

3.3%

TWIN

2.8%

US Machinery

0.8%

US Market


1 Year Return

-34.7%

TWIN

22.5%

US Machinery

17.8%

US Market

Return vs Industry: TWIN underperformed the US Machinery industry which returned 22.5% over the past year.

Return vs Market: TWIN underperformed the US Market which returned 17.8% over the past year.


Shareholder returns

TWINIndustryMarket
7 Day3.3%2.8%0.8%
30 Day-11.6%0.2%1.8%
90 Day-16.4%7.4%4.1%
1 Year-34.7%-34.7%24.8%22.5%20.4%17.8%
3 Year-28.9%-28.9%44.3%35.3%45.9%36.4%
5 Year-44.5%-45.8%69.7%49.7%68.1%49.6%

Price Volatility Vs. Market

How volatile is Twin Disc's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Twin Disc undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: TWIN ($10.27) is trading below our estimate of fair value ($33.65)

Significantly Below Fair Value: TWIN is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: TWIN is poor value based on its PE Ratio (94.7x) compared to the Machinery industry average (22.6x).

PE vs Market: TWIN is poor value based on its PE Ratio (94.7x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: TWIN is good value based on its PEG Ratio (0.8x)


Price to Book Ratio

PB vs Industry: TWIN is good value based on its PB Ratio (0.8x) compared to the US Machinery industry average (2.4x).


Next Steps

Future Growth

How is Twin Disc forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

118.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TWIN's forecast earnings growth (118% per year) is above the savings rate (1.7%).

Earnings vs Market: TWIN's earnings (118% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: TWIN's revenue (1.3% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: TWIN's revenue (1.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if TWIN's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Twin Disc performed over the past 5 years?

14.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TWIN has a large one-off loss of $7.7M impacting its September 27 2019 financial results.

Growing Profit Margin: TWIN's current net profit margins (0.5%) are lower than last year (3.3%).


Past Earnings Growth Analysis

Earnings Trend: TWIN's earnings have grown by 14.4% per year over the past 5 years.

Accelerating Growth: TWIN's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: TWIN had negative earnings growth (-84.1%) over the past year, making it difficult to compare to the Machinery industry average (13.5%).


Return on Equity

High ROE: TWIN's Return on Equity (0.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Twin Disc's financial position?


Financial Position Analysis

Short Term Liabilities: TWIN's short term assets ($198.5M) exceed its short term liabilities ($72.2M).

Long Term Liabilities: TWIN's short term assets ($198.5M) exceed its long term liabilities ($95.9M).


Debt to Equity History and Analysis

Debt Level: TWIN's debt to equity ratio (29.1%) is considered satisfactory.

Reducing Debt: TWIN's debt to equity ratio has increased from 15.5% to 29.1% over the past 5 years.

Debt Coverage: TWIN's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: TWIN's interest payments on its debt are well covered by EBIT (8.3x coverage).


Balance Sheet

Inventory Level: TWIN has a high level of physical assets or inventory.

Debt Coverage by Assets: TWIN's debt is covered by short term assets (assets are 3.9x debt).


Next Steps

Dividend

What is Twin Disc's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

company0%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate TWIN's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate TWIN's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if TWIN's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if TWIN's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: TWIN is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of TWIN's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Twin Disc's salary, the management and board of directors tenure and is there insider trading?

4.6yrs

Average management tenure


CEO

John Batten (54yo)

6.4yrs

Tenure

US$2,023,707

Compensation

Mr. John H. Batten has been Chief Executive Officer of Twin Disc, Incorporated since November 1, 2013 and served as its President July 2008 until 2019. Mr. Batten served as Chief Operating Officer of Twin  ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD2.02M) is above average for companies of similar size in the US market ($USD530.45K).

Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.6yrs

Average Tenure

58yo

Average Age

Experienced Management: TWIN's management team is considered experienced (4.6 years average tenure).


Board Age and Tenure

7.9yrs

Average Tenure

64yo

Average Age

Experienced Board: TWIN's board of directors are considered experienced (7.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$169,18731 Jul 19
Teton Advisors, Inc
EntityCompany
Shares12,000
Max PriceUS$14.35
BuyUS$7,29731 Jul 19
Gabelli & Company Investment Advisers, Inc.
EntityCompany
Shares500
Max PriceUS$14.59
BuyUS$81,99031 Jul 19
GAMCO Investors, Inc.
EntityCompany
Shares41,495
Max PriceUS$15.05
SellUS$031 Jul 19
GAMCO Investors, Inc.
EntityCompany
Shares172,640
Max PriceUS$15.13
SellUS$54,00025 Feb 19
Malcolm Moore
EntityIndividual
Shares3,000
Max PriceUS$18.00

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 13.2%.


Management Team

  • Jim Feiertag (62yo)

    President & COO

    • Tenure: 0.9yrs
    • Compensation: US$743.37k
  • John Batten (54yo)

    CEO & Director

    • Tenure: 6.4yrs
    • Compensation: US$2.02m
  • Dean Bratel (55yo)

    Vice President of Sales & Applied Technology

    • Tenure: 3.3yrs
    • Compensation: US$695.39k
  • Denise Wilcox (62yo)

    Vice President of Human Resources

    • Tenure: 15.1yrs
    • Compensation: US$653.21k
  • Jeff Knutson (54yo)

    VP of Finance

    • Tenure: 4.8yrs
    • Compensation: US$821.10k
  • Debbie Lange (61yo)

    Corporate Controller

    • Tenure: 4.3yrs

Board Members

  • David Rayburn (71yo)

    Chairman of the Board

    • Tenure: 4.6yrs
    • Compensation: US$175.01k
  • Harold Stratton (71yo)

    Independent Director

    • Tenure: 15.4yrs
    • Compensation: US$134.26k
  • David Zimmer (73yo)

    Independent Director

    • Tenure: 24.4yrs
    • Compensation: US$125.01k
  • Michael Doar (64yo)

    Independent Director

    • Tenure: 11.2yrs
    • Compensation: US$134.26k
  • John Batten (54yo)

    CEO & Director

    • Tenure: 6.4yrs
    • Compensation: US$2.02m
  • Mike Smiley (59yo)

    Independent Director

    • Tenure: 0.3yrs
    • Compensation: US$135.50k
  • David Johnson (55yo)

    Independent Director

    • Tenure: 3.4yrs
    • Compensation: US$141.88k
  • Janet Giesselman (64yo)

    Independent Director

    • Tenure: 4.5yrs
    • Compensation: US$136.88k

Company Information

Twin Disc, Incorporated's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Twin Disc, Incorporated
  • Ticker: TWIN
  • Exchange: NasdaqGS
  • Founded: 1918
  • Industry: Construction Machinery and Heavy Trucks
  • Sector: Capital Goods
  • Market Cap: US$128.248m
  • Shares outstanding: 13.36m
  • Website: https://www.twindisc.com

Number of Employees


Location

  • Twin Disc, Incorporated
  • 1328 Racine Street
  • Racine
  • Wisconsin
  • 53403
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
TWINNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDMar 1977
TWNDB (Deutsche Boerse AG)YesCommon SharesDEEURMar 1977

Biography

Twin Disc, Incorporated designs, manufactures, and sells marine and heavy duty off-highway power transmission equipment worldwide. It operates through two segments, Manufacturing and Distribution. The comp ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/11 23:41
End of Day Share Price2019/12/11 00:00
Earnings2019/09/27
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.