WIRE Stock Overview
Encore Wire Corporation manufactures and sells electrical building wires and cables for interior electrical wiring in the United States.
Encore Wire Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$113.43|
|52 Week High||US$151.64|
|52 Week Low||US$92.15|
|1 Month Change||-20.25%|
|3 Month Change||5.44%|
|1 Year Change||16.59%|
|3 Year Change||100.27%|
|5 Year Change||153.33%|
|Change since IPO||3,983.48%|
Recent News & Updates
Encore Wire: Copper Prices Will Remain Elevated Despite The Fed's Best Efforts
Summary A friendly reminder that WIRE will be reporting FQ3'22 earnings on 25 October 2022. Copper prices will likely remain elevated, due to massive global demand in the EV and green energy markets for the next few years, especially in China. The bear market will only worsen over the next few weeks, as the Fed is poised to announce a 75 basis point hike on 20 September. Investors may potentially see $100s levels soon, though current prices look attractive enough for speculative long-term investing. Investment Thesis Encore Wire Corporation (WIRE) has a long runway for growth, given the robust demand in the data center, EV, and green energy sectors. The global data center industry is expected to grow by $615.96B through 2026 at an impressive CAGR of 21.98%, with 35% attributed to the North American market. In addition, the US EV market is expected to grow tremendously from $28.04B in 2021 to $137.4B in 2028 at a CAGR of 25.4%, with the US renewable market projected to grow from 826B kWh generation in 2021 to 1170B kWh in 2027 at a CAGR of 6%. Combined with WIRE's elevated inventory levels of $121.42M in FQ2'22, representing an increase of 4.3% QoQ and 38.1% YoY, we expect to see improved sales ahead indeed as demand continues to outstrip supply. Though there are some concerns about the drastic fall in copper prices thus far, we must also remind investors that current levels still represent notable increases from pre-pandemic levels by over 25%. Thereby, further contributing to WIRE's improved financial performance over the next few quarters during a bear market condition, if not years, once the macroeconomics improves by 2024, leading to a potential bull run market between 2009 and 2019. WIRE Is Bound For Success Post Reopening Cadence S&P Capital IQ In the last twelve months (LTM), WIRE reported excellent revenues of $2.96B and gross margins of 36.1%, representing YoY growth of 14.2% and 2.6 percentage points, respectively, despite the rising inflation and global supply chain issues. This has directly contributed to its improved profitability, with net incomes of $0.68B and net income margins of 23.2% at the same time, indicating an increase of 25.9% and 2.3 percentage points YoY, respectively. S&P Capital IQ Therefore, we are not surprised by WIRE's improved Free Cash Flow ("FCF") generation, with an FCF of $0.48B and an FCF margin of 16.4% in the LTM, representing an excellent increase of 62.4% and 4.8 percentage points YoY, respectively. With further investments in its business and 1.1M of shares repurchased by H1'22, the company continues to report robust cash and equivalents of $0.46B in the latest quarter. Thereby, indicating its massive liquidity ahead, despite the worsening macroeconomics and its zero reliance on debts. S&P Capital IQ WIRE's management also took the chance to re-invest into the business, with increased capital expenditures of $134.7M to net PPE assets of $0.56B in the LTM. A total of $170M in Capex is also planned for FY2022 indicating an increase of 43.7% YoY, with another $170M planned in 2023 and $100M in 2024. Thereby, further expanding the company's production capacity and output, which will prove to be top and bottom lines accretive as copper prices continue to be elevated compared to pre-pandemic levels. Copper Prices Trading Economics On the other side of the world, there are reports of a 26% YoY increase in copper imports for August in China, possibly attributed to the lower prices compared to 2021 highs. However, we are more optimistic, since the country is expected to install a record high of 157 GWs of green energies from wind turbines and solar panels in 2022, representing a notable increase of 25% YoY from last year's previous record. In addition, a total of 1,200 GW of wind and solar installation in China is planned by the end of the decade. Fun fact, the US government planned 207 GW of solar energy and 73.4 GW of wind energy installation over the next five years. As a result, given that China is the largest importer of copper, accounting for 60.7% of global needs in 2021, with the first eight months of 2022 already reporting an 8.1% increase YoY, we expect to see current copper prices holding for a little longer. Thereby, contributing to WIRE's sustained performance ahead. WIRE's Fundamental Performance Remains Intact For Now S&P Capital IQ Over the next two years, WIRE is expected to report an adj. revenue and an adj. net income growth at a CAGR of 18.80% and 50.90%, respectively, between FY2019 and FY2023. It is apparent that consensus estimates are very optimistic about its forward execution, given the improvement in its net income margins from 4.6% in FY2019, 20.9% in FY2021, and finally settling at 11.88% by FY2023. In the meantime, WIRE is expected to report revenues of $2.89B and net incomes of $606.8M in FY2022, representing stellar YoY growth of 11.54% and 12.07%, respectively, despite the tougher YoY comparison. With projected net income margins of 20.98% in FY2022, it is unlikely that we will see a drastic fall in its stock valuations to pre-pandemic levels. For FQ3'22, analysts are projecting revenues of $0.69B and EPS of $6.82, representing a YoY decline of -3.24% and -19.92%, respectively. However, it is important to note that this fall is only attributed to the lower copper prices, instead of the company's fundamental performance.
At US$131, Is It Time To Put Encore Wire Corporation (NASDAQ:WIRE) On Your Watch List?
Encore Wire Corporation ( NASDAQ:WIRE ), is not the largest company out there, but it led the NASDAQGS gainers with a...
Encore Wire: Ride The Energy Transition With A Boring Business
Demand for copper wire is gaining strength as the demand for electricity rapidly increases. Thanks to their integrated business model, Encore Wire has been very effective at controlling costs. The benefits of a strong balance sheet with zero long-term debt will be amplified in a high interest rate environment. Investment Thesis Encore Wire (WIRE) is a low-cost manufacturer of electrical building wire and cable. They are a significant supplier of building wire (copper and aluminum) for commercial, industrial, and residential buildings. Thanks to their vertically integrated business model and efficient manufacturing processes, they hold an industry-leading fill rate and have been meeting the rising demand for electric wire. Many industries (data center, renewables, EV charging, and healthcare) are driving this trend, and I believe Encore is an excellent investment choice for the long-term investor. The following are the main reasons: Demand for electrical wire will continue to substantially increase, driven by a multitude of sources (data center, renewable, healthcare, residential, and EV infrastructure). Encore's business model and manufacturing efficiency is enabling them to meet the strong demand, while still managing costs very effectively. A superb balance sheet with zero long term debt provides stability and a competitive edge during an environment of high interest rates. Multifaceted Demand Drivers As we all know, the demand for electricity has been steadily rising, and that trend brings a relentlessly rising demand for electric wire. On top of growth from traditional commercial, industrial, and residential building applications, several new trends are boosting demand even further. The proliferation of data centers is a recent trend that contributes to rising demand for wire. Many companies now appreciate the power of large data and artificial intelligence, and are building out powerful data centers. These data centers consume a great deal of energy, requiring a large amount of electrical wire. Also, renewable energy sources such as solar and wind require substantial electric wirings, and the Senate's recent bill will further fuel the construction of renewable energy plants. Additionally, the ongoing EV transition demands wires for its infrastructure (EV charging stations, larger distribution capacity, and battery storage). All of these sources will contribute to long-lasting growth for Encore Wire. Demand Drivers for Encore (Encore Investor Relations) Energy Usage in Information and Communication Technology Sector (AKCP) Strong Cost Control Encore has a vertically integrated business model, which means they own most of their supply chain from raw material to delivery, along with a highly efficient manufacturing site. These two factors have contributed to a superb gross margin throughout their history, and have been accentuated over the past couple of years. The sharply rising demand, along with constraints in the supply chain, have caused prices on both raw materials and finished electrical wires to increase significantly in the past couple of years. While many of Encore's competitors have struggled, Encore has actually thrived in this environment. Their strong logistics, supply chain, and operations not only allowed them to control costs, but also enhanced their gross margin. With several planned CAPEX investments (new service center, expansion of manufacturing capacity, and modernization of facilities) on the horizon, I expect Encore to maintain these competitive advantages. Gross margin of Encore (Encore Investor Relations) Strong Balance Sheet To fight inflation, the Federal Reserve has been raising interest rates. This environment typically brings challenges for companies with weak financial security. Interest payments increase and chew on the profit margin. Meanwhile, a recessionary environment causes the availability of capital on the market to shrink. Encore Wire won't have these challenges because they carry zero long-term debt and $469 M cash on hand. Also, their revolving line of credit remains untapped. Therefore, rising interest rates won't reduce their profit margin, so Encore shouldn't run into issues in executing their CAPEX plan. Intrinsic Value Estimation Since my last article, Encore's business grew substantially, and their cash flow has improved. I updated my DCF model to estimate a new intrinsic value. For the estimation, I utilized the free cash flow ($368 M) and current WACC of 8.0% as the discount rate. For the base case, I assumed free cash flow growth of 10% (long term EPS growth expectation) for the next 5 years and zero growth afterwards (zero terminal growth). For the bullish and very bullish case, I assumed operating cash flow growth of 12% and 14%, respectively, for the next 5 years and zero growth afterwards. The estimation showed that the current stock is severely undervalued. With multifaceted growth drivers, a strong balance sheet, and superb business model, I expect Wire to achieve a great upside in the long run. Price Target Upside Base Case $253.89 107% Bullish Case $273.28 122% Very Bullish Case $294.00 139% The assumptions and data used for the price target estimation are summarized below: WACC: 8.0% Cash Flow Growth Rate: 10% (Base Case), 12% (Bullish Case), 14% (Very Bullish Case) Current Free Cash Flow: $368 M Current Stock Price: $122.89 (08/08/2022) Tax rate: 20% Separately, I performed a downside calculation based on Encore's beta (1.27) using S&P 500's standard deviation (~6%, past 12 month). This calculation suggests a potential downside of -16% (with 95% confidence level). The take home is that the potential upside here is much greater than the potential downside. Cappuccino Stock Rating Weighting WIRE Economic Moat Strength 30% 4 Financial Strength 30% 5 Growth Rate vs. Sector 15% 4 Margin of Safety 15% 5 Sector Outlook 10% 4 Overall 4.5 Economic Moat Strength (4/5)
|WIRE||US Electrical||US Market|
Return vs Industry: WIRE exceeded the US Electrical industry which returned -23.7% over the past year.
Return vs Market: WIRE exceeded the US Market which returned -21.6% over the past year.
|WIRE Average Weekly Movement||8.0%|
|Electrical Industry Average Movement||10.7%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.9%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: WIRE is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.
Volatility Over Time: WIRE's weekly volatility (8%) has been stable over the past year.
About the Company
Encore Wire Corporation manufactures and sells electrical building wires and cables for interior electrical wiring in the United States. The company’s products include NM-B cables for use as interior wiring in homes, apartments, and manufactured housing; THHN/THWN-2 cables and metal-clad and armored cables for use as wiring in commercial and industrial buildings; UF-B cables; XHHW-2 cables; RHH/RHW-2 cables; USE-2 cables; and other types of wire products. It sells its products to wholesale electrical distributors primarily through independent manufacturers’ representatives.
Encore Wire Fundamentals Summary
|WIRE fundamental statistics|
Is WIRE overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|WIRE income statement (TTM)|
|Cost of Revenue||US$1.90b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||36.04|
|Net Profit Margin||23.24%|
How did WIRE perform over the long term?See historical performance and comparison
0.07%Current Dividend Yield
Does WIRE pay a reliable dividends?See WIRE dividend history and benchmarks
|Encore Wire dividend dates|
|Ex Dividend Date||Oct 06 2022|
|Dividend Pay Date||Oct 21 2022|
|Days until Ex dividend||11 days|
|Days until Dividend pay date||26 days|
Does WIRE pay a reliable dividends?See WIRE dividend history and benchmarks
Is WIRE undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 3/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for WIRE?
Other financial metrics that can be useful for relative valuation.
|What is WIRE's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does WIRE's PE Ratio compare to its peers?
|WIRE PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
WIRE Encore Wire
Price-To-Earnings vs Peers: WIRE is good value based on its Price-To-Earnings Ratio (3.1x) compared to the peer average (42.4x).
Price to Earnings Ratio vs Industry
How does WIRE's PE Ratio compare vs other companies in the US Electrical Industry?
Price-To-Earnings vs Industry: WIRE is good value based on its Price-To-Earnings Ratio (3.1x) compared to the US Electrical industry average (19.4x)
Price to Earnings Ratio vs Fair Ratio
What is WIRE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||3.1x|
|Fair PE Ratio||5.2x|
Price-To-Earnings vs Fair Ratio: WIRE is good value based on its Price-To-Earnings Ratio (3.1x) compared to the estimated Fair Price-To-Earnings Ratio (5.2x).
Share Price vs Fair Value
What is the Fair Price of WIRE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: WIRE ($113.43) is trading above our estimate of fair value ($56.54)
Significantly Below Fair Value: WIRE is trading above our estimate of fair value.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price, but there are not enough analysts covering the stock to determine statistical confidence in agreement.
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How is Encore Wire forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?
Future Growth Score0/6
Future Growth Score 0/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: WIRE's earnings are forecast to decline over the next 3 years (-51.4% per year).
Earnings vs Market: WIRE's earnings are forecast to decline over the next 3 years (-51.4% per year).
High Growth Earnings: WIRE's earnings are forecast to decline over the next 3 years.
Revenue vs Market: WIRE's revenue is expected to decline over the next 3 years (-11% per year).
High Growth Revenue: WIRE's revenue is forecast to decline over the next 3 years (-11% per year).
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: Insufficient data to determine if WIRE's Return on Equity is forecast to be high in 3 years time
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How has Encore Wire performed over the past 5 years?
Past Performance Score6/6
Past Performance Score 6/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: WIRE has high quality earnings.
Growing Profit Margin: WIRE's current net profit margins (23.2%) are higher than last year (14.1%).
Past Earnings Growth Analysis
Earnings Trend: WIRE's earnings have grown significantly by 57.5% per year over the past 5 years.
Accelerating Growth: WIRE's earnings growth over the past year (155.9%) exceeds its 5-year average (57.5% per year).
Earnings vs Industry: WIRE earnings growth over the past year (155.9%) exceeded the Electrical industry 27.4%.
Return on Equity
High ROE: WIRE's Return on Equity (43.5%) is considered outstanding.
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How is Encore Wire's financial position?
Financial Health Score6/6
Financial Health Score 6/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: WIRE's short term assets ($1.2B) exceed its short term liabilities ($145.2M).
Long Term Liabilities: WIRE's short term assets ($1.2B) exceed its long term liabilities ($39.7M).
Debt to Equity History and Analysis
Debt Level: WIRE is debt free.
Reducing Debt: WIRE has not had any debt for past 5 years.
Debt Coverage: WIRE has no debt, therefore it does not need to be covered by operating cash flow.
Interest Coverage: WIRE has no debt, therefore coverage of interest payments is not a concern.
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What is Encore Wire current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Current Dividend Yield
Upcoming Dividend Payment
Dividend Yield vs Market
Notable Dividend: WIRE's dividend (0.07%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.62%).
High Dividend: WIRE's dividend (0.07%) is low compared to the top 25% of dividend payers in the US market (4.45%).
Stability and Growth of Payments
Stable Dividend: WIRE is not paying a notable dividend for the US market, therefore no need to check if payments are stable.
Growing Dividend: WIRE is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.
Earnings Payout to Shareholders
Earnings Coverage: WIRE is not paying a notable dividend for the US market.
Cash Payout to Shareholders
Cash Flow Coverage: WIRE is not paying a notable dividend for the US market.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Daniel Jones (59 yo)
Mr. Daniel L. Jones has been the Chief Executive Officer and President of Encore Wire Corporation since February 2006 and has been its Chairman since November 2014 and has been its Director since May 1992....
CEO Compensation Analysis
Compensation vs Market: Daniel's total compensation ($USD7.59M) is above average for companies of similar size in the US market ($USD5.58M).
Compensation vs Earnings: Daniel's compensation has increased by more than 20% in the past year.
Experienced Management: WIRE's management team is seasoned and experienced (15 years average tenure).
Experienced Board: WIRE's board of directors are seasoned and experienced ( 17.8 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Encore Wire Corporation's employee growth, exchange listings and data sources
- Name: Encore Wire Corporation
- Ticker: WIRE
- Exchange: NasdaqGS
- Founded: 1989
- Industry: Electrical Components and Equipment
- Sector: Capital Goods
- Implied Market Cap: US$2.169b
- Shares outstanding: 19.13m
- Website: https://www.encorewire.com
Number of Employees
- Encore Wire Corporation
- 1329 Millwood Road
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|WIRE||NasdaqGS (Nasdaq Global Select)||Yes||Common Stock||US||USD||Jul 1992|
|EW3||DB (Deutsche Boerse AG)||Yes||Common Stock||DE||EUR||Jul 1992|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/23 00:00|
|End of Day Share Price||2022/09/23 00:00|
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.