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The L.S. Starrett CompanyNYSE:SCX Stock Report

Market Cap US$118.7m
Share Price
n/a
US$15.9
n/aintrinsic discount
1Y52.4%
7D0.1%
1D
Portfolio Value
​
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The L.S. Starrett Company

NYSE:SCX Stock Report

Market Cap: US$118.7m

This company has been acquired

The company may no longer be operating, as it has been acquired. Find out why through their latest events.

L.S. Starrett (SCX) Stock Overview

Manufactures and sells industrial, professional, and consumer measuring and cutting tools, and related products in North America, Brazil, and China. More details

SCX fundamental analysis
Snowflake Score
Valuation2/6
Future Growth0/6
Past Performance2/6
Financial Health6/6
Dividends0/6

Rewards

Price-To-Earnings ratio (9.7x) is below the US market (17.4x)

Risk Analysis

Highly volatile share price over the past 3 months


SCX Community Fair Values

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See what others think this stock is worth. Follow their fair value or set your own to get alerts.

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The L.S. Starrett Company Competitors

Price History & Performance

Summary of share price highs, lows and changes for L.S. Starrett
Historical stock prices
Current Share PriceUS$16.18
52 Week HighUS$16.19
52 Week LowUS$8.55
Beta0.48
1 Month Change1.06%
3 Month Change64.26%
1 Year Change52.35%
3 Year Change74.92%
5 Year Change113.46%
Change since IPO71.44%

Recent News & Updates

Analysis Article • Jan 27

Is L.S. Starrett (NYSE:SCX) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that...

Recent updates

Analysis Article • Jan 27

Is L.S. Starrett (NYSE:SCX) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that...
Analysis Article • Sep 16

L.S. Starrett (NYSE:SCX) Has A Pretty Healthy Balance Sheet

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...
Analysis Article • May 27

The Return Trends At L.S. Starrett (NYSE:SCX) Look Promising

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? One common approach...
Seeking Alpha • May 25

L.S. Starrett Company: Cheap But Declining Order Rate Is A Concern

Summary Order rate has been declining over the last few quarters, which should impact top-line growth in the coming quarters. Volume deleverage should impact margins. Despite cheap valuations, I have a neutral rating on the stock. Read the full article on Seeking Alpha
Seeking Alpha • Feb 03

L.S. Starrett: Lean Business, Pension Plan Issues Seem Resolved

Summary The company weathered the effects of the COVID-19 pandemic well and is currently trading at just 4.5x price /TTM earnings and 0.63x price/BV. In addition, rising interest rates have significantly diminished its pension plan funding issues. I think that the valuation of L.S. Starrett could improve to about 0.8 price/BV over the coming months and I rate the stock as a speculative buy. Introduction I like to write about companies that lack coverage on SA and today I'm taking a look at The L.S. Starrett Company (SCX). It's a precision tools maker that has been around for over a century and I think it looks undervalued at the moment as FY23 is off to a good start and TTM net income stands at $13.7 million. The gross margin improved by 70 basis points year on year to 33.4% in Q1 FY23 as it seems the company is successfully passing on increased costs to customers. In addition, the lingering pension plan funding issues seem much smaller than they used to be. Let’s review. Overview of the business and financials The L.S. Starrett Company was founded 1880 in a small town in Massachusetts named Athol by Laroy Starrett, who invented and patented the first combination square two years before that. The company was set up to manufacture this product and today it has a portfolio of over 5,000 precision tools, cutting equipment, and metrology systems products for the metalworking, automotive, aviation, marine, and farm industries and the do-it-yourselfers (DIY) sector. It’s also the largest manufacturer of saw blades in the world. L.S. Starrett is still based in Athol and it has a total of 9 manufacturing facilities across the USA, Brazil, China, and Scotland. The largest of those is in Athol and about half of the company’s sales come from outside the USA. L.S. Starrett Looking at the financial results for the past decade, L.S. Starrett started struggling with sales growth and low margins in the middle of the past decade due to recessions and stagnation across some of its main markets such as Brazil and the EU. The company responded by reducing its headcount and implementing saw plant consolidation and these measures helped it return to growth in FY18. In my view, this restructuring of the business positioned the company well to weather the effects of the COVID-19 pandemic as FY22 sales were the second highest in its history, just shy of the $260.1 million achieved in FY12. Yet, the cost structure was much better this time around thanks to optimized SG&A costs and net income came in at $14.9 million compared to just $0.9 million in FY12. Seeking Alpha The company has been implementing price increases over the past several months to counter pressure from inflation and supply chain disruptions and this allowed it to boost its gross margin to 33.4% in Q1 FY23. Net sales and net income were negatively impacted by foreign exchange losses as the U.S. dollar strengthened against the currencies of Brazil, the UK, and New Zealand, but the effects should be reversed in Q4 2022. I expect net income for the last quarter of the calendar year to be above $3 million once again. L.S. Starrett L.S. Starrett However, I find it concerning that L.S. Starrett complained about softened order intake in its foreign markets, particularly in Europe as a result of recession fears and the effects from the war in Ukraine. In my view, the impact should be limited considering that the major market of the company outside the USA is Brazil. L.S. Starrett On that note, it’s still unclear what direction the Brazilian economy will take with the election of Lula as president. During his previous stint ahead of the country, average annual GDP growth was 4.5% but there were headwinds for the economy from strong global demand commodities. I’d be surprised if GDP growth in 2023 surpasses 1% and it’s possible that some of his policies are already negatively affecting the sales of L.S. Starrett in the country. For example, Lula’s plans to reverse Amazon deforestation could be already putting pressure on local saw blade demand. Turning our attention to the cash flow picture, I don’t like the lack of free cash flow, but the situation should improve in the coming quarters. In Q1 FY23, L.S. Starrett increased inventories by $5 million due to global supply chain issues. They should decline over the coming months. L.S. Starrett In my view, the balance sheet looks strong as net debt stood at just $17.5 million as of September 2022. In addition, L.S. Starrett is trading at only 0.63 price/BV as of the time of writing. This is close to the levels from 2012 when profitability was an issue. L.S. Starrett In April 2022, fellow SA contributor Tomas Andrade Campanini pointed out that the company had underfunded pension obligations which require about $8 million in yearly funding. However, the situation looks better today thanks to rising interest rates around the world and L.S. Starrett revealed in its Q1 FY23 financial report that its two pension plans are expected to require contributions of just $2.2 million in FY23 (see page 13 here). Overall, I think that L.S. Starrett is in good shape from a financial standpoint and that its FY23 financial results should benefit from rising interest rates and a weakening US dollar. In my view, the company should be trading at somewhere around 0.8 P/BV to reflect the improved financial performance and diminished pension plan funding issues.
Analysis Article • Nov 05

Here's Why L.S. Starrett (NYSE:SCX) Can Manage Its Debt Responsibly

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...
Analysis Article • May 11

These 4 Measures Indicate That L.S. Starrett (NYSE:SCX) Is Using Debt Extensively

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...
Seeking Alpha • Apr 12

The Starrett Company Is Selling At A Discount Because Of Its Underfunded Pension Plan

SCX manufactures a gigantic array of tools that are sold to several industries and to consumers. The company does not suffer from ultra low margins but does not have a tremendous moat either. Although the company has suffered from volatile revenues, it has consistently increased gross margins and decreased operating expenses. With conservative financing, the company does not seem risky in terms of leverage. However, its underfunded pension obligations require an unaccounted cash expenditure of $8 million per year.
Analysis Article • Jan 18

Is L.S. Starrett (NYSE:SCX) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...
Analysis Article • Nov 02

There's Been No Shortage Of Growth Recently For L.S. Starrett's (NYSE:SCX) Returns On Capital

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd...
Analysis Article • Oct 07

Why We Think The L.S. Starrett Company's (NYSE:SCX) CEO Compensation Is Not Excessive At All

The L.S. Starrett Company ( NYSE:SCX ) has exhibited strong share price growth in the past few years. However, its...
Seeking Alpha • Sep 08

L.S. Starrett Doubled As Predicted And May Double Again

L.S. Starrett is a microcap tool manufacturer that has rallied on strong and accelerating earnings over the past four quarters. Yet it still trades at a PE ratio of about 6. Earnings growth is being driven by a large permanent cost reduction, a much lower pension obligation, and revenue growth. Despite being solidly profitable and with an improved balance sheet, the stock trades at tangible book value and for 36% of revenues.
Analysis Article • Sep 03

Is L.S. Starrett (NYSE:SCX) Using Debt Sensibly?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to...
Analysis Article • Feb 18

Health Check: How Prudently Does L.S. Starrett (NYSE:SCX) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company...
Analysis Article • Dec 10

Thomas Riordan Is The Lead Independent Director of The L.S. Starrett Company (NYSE:SCX) And They Just Picked Up 45% More Shares

Whilst it may not be a huge deal, we thought it was good to see that the The L.S. Starrett Company ( NYSE:SCX ) Lead...
Analysis Article • Nov 20

Is L.S. Starrett (NYSE:SCX) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's...

Shareholder Returns

SCXUS MachineryUS Market
7D0.1%-3.7%-4.1%
1Y52.4%36.1%20.6%

Return vs Industry: SCX exceeded the US Machinery industry which returned 33.8% over the past year.

Return vs Market: SCX exceeded the US Market which returned 28.2% over the past year.

Price Volatility

Is SCX's price volatile compared to industry and market?
SCX volatility
SCX Average Weekly Movement16.7%
Machinery Industry Average Movement6.6%
Market Average Movement7.2%
10% most volatile stocks in US Market16.6%
10% least volatile stocks in US Market3.1%

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

Volatility Over Time: SCX's weekly volatility has increased from 11% to 17% over the past year.

About the Company

FoundedEmployeesCEOWebsite
18801,529Douglas Starrettwww.starrett.com

The L.S. Starrett Company, together with its subsidiaries, manufactures and sells industrial, professional, and consumer measuring and cutting tools, and related products in North America, Brazil, and China. The company’s products include precision tools, electronic gauges, gage blocks, optical vision and laser measuring equipment, custom engineered granite solutions, tape measures, levels, chalk products, squares, band saw blades, hole saws, hacksaw blades, jig saw blades, and reciprocating saw blades, as well as M1 lubricant and precision ground flat stock products. It also provides measuring tools, such as micrometers, vernier calipers, height distributors, depth gages, electronic gages, dial indicators, steel rules, combination squares, and custom and non-contact gaging such as vision, optical, and measurement systems.

The L.S. Starrett Company Fundamentals Summary

How do L.S. Starrett's earnings and revenue compare to its market cap?
SCX fundamental statistics
Market capUS$118.69m
Earnings (TTM)US$12.59m
Revenue (TTM)US$250.75m
9.7x
P/E Ratio
0.5x
P/S Ratio

Is SCX overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report (TTM)
SCX income statement (TTM)
RevenueUS$250.75m
Cost of RevenueUS$173.18m
Gross ProfitUS$77.57m
Other ExpensesUS$64.98m
EarningsUS$12.59m

Last Reported Earnings

Mar 31, 2024

Next Earnings Date

n/a

Earnings per share (EPS)1.68
Gross Margin30.94%
Net Profit Margin5.02%
Debt/Equity Ratio6.2%

How did SCX perform over the long term?

See historical performance and comparison

Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2024/05/23 12:18
End of Day Share Price 2024/05/23 00:00
Earnings2024/03/31
Annual Earnings2023/06/30

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

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.

Analysis Model and Snowflake

Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.

Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

The L.S. Starrett Company is covered by 0 analysts. 0 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.