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USAP

Universal Stainless & Alloy Products NasdaqGS:USAP Stock Report

Last Price

US$7.21

Market Cap

US$64.7m

7D

3.0%

1Y

-29.8%

Updated

03 Oct, 2022

Data

Company Financials +
USAP fundamental analysis
Snowflake Score
Valuation2/6
Future Growth1/6
Past Performance2/6
Financial Health4/6
Dividends0/6

USAP Stock Overview

Universal Stainless & Alloy Products, Inc., together with its subsidiaries, manufactures and markets semi-finished and finished specialty steel products in the United States and internationally.

Universal Stainless & Alloy Products Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Universal Stainless & Alloy Products
Historical stock prices
Current Share PriceUS$7.21
52 Week HighUS$10.79
52 Week LowUS$6.52
Beta1.23
1 Month Change-8.27%
3 Month Change1.84%
1 Year Change-29.80%
3 Year Change-50.00%
5 Year Change-65.57%
Change since IPO-12.61%

Recent News & Updates

Aug 24

Universal Stainless & Alloy Products Ignored On The Runway As Business Starts To Take Off

Summary Universal Stainless & Alloy has continued to lag other specialty material producers despite a growth in orders, backlog, and margins, ahead of a more significant ramp in production/shipment volumes. Aerospace is leading the charge, and USAP is effectively booked out through the third quarter of 2023 and looking to increase capacity of higher-value materials. I expect USAP to see revenue double from 2021 to 2025, and there could be greater long-term upside if aircraft production stays stronger for longer. I believe USAP should be trading in the low-to-mid teens given EBITDA growth prospects over the next two to three years. The last six months or so have been increasingly frustrating as an observer and analyst of Universal Stainless & Alloy Products (USAP) (“Universal Stainless”). Other providers of alloys and specialty materials to the aerospace industry have seen their share prices outperform Universal Stainless, ATI (ATI) in particular, but Universal Stainless has been frustratingly weak since my last update despite improving orders, pricing, and margins. Given aircraft production schedules and guidance from major OEMs like Airbus (EADSY) and Boeing (BA), I believe USAP is about to see a significant ramp in revenue and expansion in margins. On top of that, the company is poised to benefit from recovering oil/gas activity, as well as efforts to upgrade the product portfolio (including participating in “hot side” engine components). Even at a significant multiple discount to ATI or Carpenter (CRS), I see upside into the low-to-mid teens as USAP delivers on the growing demand from aerospace customers. Readers should note that USAP is very small (less than $100M in market cap), fairly illiquid (fewer than 20K shares traded per day, on average), and not followed by Wall Street analysts. Consequently, it’s fair to assume that this is a riskier stock. Orders Growing, Volumes Starting To Ramp Universal Stainless was held back, at least in part, in the second quarter by an accident (a metal spill), but there is growing evidence of building momentum. Even with the accident, volume increased 1% year over year and 7% quarter over quarter, and management is working all out to increase production volumes. Things as they are, management has quoted lead-times out to the third quarter of next year for new orders. At the same time, orders continue to roll in as aerospace companies scramble to get the materials they need to meet the growing demand of major OEMs like Airbus and Boeing, as well as bizjet OEMs like Textron (TXT) (the bizjet/regional market has been quite strong of late too). Backlog rose 125% yoy and 10% qoq in the second quarter, and USAP continues to see higher-margin premium products creep up as a percentage of that backlog (now at 26%) versus a Q2’22 revenue mix that favored lower-margin specialty alloys to a level of more than 80%. Aerospace sales rose 67% yoy and 19% qoq in the second quarter (making up 68% of revenue), but are still over a quarter below the most recent peak for the company. That growth is at least directionally consistent with what others like ATI, Carpenter, Hexcel (HXL), and Materion (MTRN) are seeing, and the general expectation is that OEM build-rates will continue to grow from here, particularly when widebody builds recover in late FY’23/2024. Other markets are showing more mixed performance. Although oil prices have eased off some, offshore exploration activity is picking up and that’s good for USAP’s oil/gas business (revenue was up 21% yoy and 7% qoq in the second quarter). Heavy industry and general industry were surprisingly weak in the quarter, though, (down 11% qoq and 35% qoq, respectively), and while quarterly volatility is not new or rare in these markets, I wonder if this is a byproduct of companies becoming more cautious on building inventories on concerns of slowing demand. I’m not sure, but it’s worth watching as a possible leading indicator. With a capacity-constrained industry, pricing should also be healthy. Most of USAP’s second quarter pricing leverage came from material pass-throughs (nickel and so on), but base prices were still 6% higher than in the year-ago period, and I would expect further pricing moves as the backlog fills. Self-Help Could Make A Difference As I’ve written in prior pieces, USAP’s buy-and-hold credentials are poor. This is a company that generated zero net free cash flow from 2006 to 2021 (the best year was +$25M, the worst was -$29M), and they’re not especially well-placed on the spectrum of specialty materials companies. As I mentioned above, the company is only just now offering products that could be used in the hot side of engines, and their products have generally skewed to lower-spec, lower-margin categories. Management is working on this. The company now has products for engine hot-side use, though it will take time to get those qualified in by customers. In the most recent update, the company noted 9 net new customer approvals since Q2’20 (54 since 2016), 2 new product introductions (from 17 in Q2'20 to 19), and 19 products under development exiting the quarter. At the same time, the company has been selectively pruning away lower-value commodity products and continuing to reinvest in production capacity for premium alloys (including new vacuum melt furnaces). The Outlook Based on healthy trends year-to-date, as well as that swelling backlog, I’ve increased my modeling estimates. I was a bit below $200M for ’22 revenue, but I’ve moved up to over $220M, with better than 20% growth on top of that in ’23 and high single-digit growth in ’24. I’m a little concerned that I’ve gone too far too fast for ’23 (management has guided to “$200M-plus revenue), particularly if the price of commodities like nickel back off, but I also think I may be too low for ’25 revenue. Given under-absorption of overhead, a sharp upturn in revenue will drive a strong improvement in gross margin. That’s already in process, as adjusted gross margin more than doubled in Q2 to 12.6%, and I expect full-year gross margin above 12% with improvement over the next four years. My EBITDA estimates have moved from a little over $22M to $24M for FY’22 and to over $35M for FY’23. For free cash flow, working capital needs and capex have led me to reverse expected positive free cash flow to a smallish deficit in FY’22 (around $7M), but flip an expected deficit in FY’23 to over $20M in positive free cash flow.

Jul 27

Universal Stainless & Alloy Products GAAP EPS of -$0.16 misses by $0.05, revenue of $52.16M

Universal Stainless & Alloy Products press release (NASDAQ:USAP): Q2 GAAP EPS of -$0.16 misses by $0.05. Revenue of $52.16M (+35.5% Y/Y). Quarter-end Backlog reaches new record of $222.7 million, up 10% from record Q1 2022, up 125% from Q2 2021. Q2 2022 Gross margin rises to 9.1% of sales. Gross margin is 12.6% of sales excluding AMJP grant benefit and charges incurred from liquid metal spill. Q2 2022 EBITDA increases to $4.3 million; Adjusted EBITDA increases to $6.4 million.

Jul 11

Universal Stainless & Alloy Products raises base price 9%-12% on bar products

Universal Stainless & Alloy Products (NASDAQ:USAP) announced Monday a base price increase of 9% to 12% on bar products, effective immediately. That follows the last base price increase of 3% to 10% announced in March on bar products. "We are in an environment that has brought sharp inflationary cost increases to nearly all areas of our business, and it is necessary for us to adjust our pricing to keep up with this higher cost burden. We will continue to take the actions necessary to manage our organization and maintain our class leading customer service levels and exceptional production quality standard," commented USAP EVP and CCO Chris Zimmer.  Earlier: Universal Stainless & Alloy Products GAAP EPS of -$0.18, revenue of $47.56M beats by $1.18M

Shareholder Returns

USAPUS Metals and MiningUS Market
7D3.0%9.8%1.0%
1Y-29.8%-9.6%-20.0%

Return vs Industry: USAP underperformed the US Metals and Mining industry which returned -14.6% over the past year.

Return vs Market: USAP underperformed the US Market which returned -23.2% over the past year.

Price Volatility

Is USAP's price volatile compared to industry and market?
USAP volatility
USAP Average Weekly Movement6.1%
Metals and Mining Industry Average Movement8.4%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: USAP is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: USAP's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1994558Denny Oateshttps://www.univstainless.com

Universal Stainless & Alloy Products, Inc., together with its subsidiaries, manufactures and markets semi-finished and finished specialty steel products in the United States and internationally. Its products include stainless steel, nickel alloys, tool steel, and various other alloyed steels. The company offers semi-finished and finished long products in the form of ingots, billets, and bars; flat rolled products, such as slabs and plates; and customized shapes primarily for original equipment manufacturers (OEMs), which are cold rolled from purchased coiled strip, flat bar, or extruded bar.

Universal Stainless & Alloy Products Fundamentals Summary

How do Universal Stainless & Alloy Products's earnings and revenue compare to its market cap?
USAP fundamental statistics
Market CapUS$64.71m
Earnings (TTM)US$3.21m
Revenue (TTM)US$180.11m

20.1x

P/E Ratio

0.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
USAP income statement (TTM)
RevenueUS$180.11m
Cost of RevenueUS$159.17m
Gross ProfitUS$20.95m
Other ExpensesUS$17.74m
EarningsUS$3.21m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.36
Gross Margin11.63%
Net Profit Margin1.78%
Debt/Equity Ratio37.2%

How did USAP perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is USAP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for USAP?

Other financial metrics that can be useful for relative valuation.

USAP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.8x
Enterprise Value/EBITDA8.2x
PEG Ration/a

Price to Earnings Ratio vs Peers

How does USAP's PE Ratio compare to its peers?

USAP PE Ratio vs Peers
The above table shows the PE ratio for USAP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average6.3x
FRD Friedman Industries
4xn/aUS$54.0m
WEBC Webco Industries
2.4xn/aUS$127.6m
ACNT Ascent Industries
4xn/aUS$149.3m
HAYN Haynes International
15x19.7%US$463.5m
USAP Universal Stainless & Alloy Products
20.1xn/aUS$64.7m

Price-To-Earnings vs Peers: USAP is expensive based on its Price-To-Earnings Ratio (20.1x) compared to the peer average (6.3x).


Price to Earnings Ratio vs Industry

How does USAP's PE Ratio compare vs other companies in the US Metals and Mining Industry?

Price-To-Earnings vs Industry: USAP is expensive based on its Price-To-Earnings Ratio (20.1x) compared to the US Metals and Mining industry average (6.3x)


Price to Earnings Ratio vs Fair Ratio

What is USAP'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.

USAP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio20.1x
Fair PE Ration/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate USAP's Price-To-Earnings Fair Ratio for valuation analysis.


Share Price vs Fair Value

What is the Fair Price of USAP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: USAP ($7.21) is trading below our estimate of fair value ($13.39)

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


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.


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Future Growth

How is Universal Stainless & Alloy Products forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


19.3%

Forecasted annual revenue growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if USAP's forecast earnings growth is above the savings rate (1.9%).

Earnings vs Market: Insufficient data to determine if USAP's earnings are forecast to grow faster than the US market

High Growth Earnings: Insufficient data to determine if USAP's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: USAP's revenue (19.3% per year) is forecast to grow faster than the US market (7.7% per year).

High Growth Revenue: USAP's revenue (19.3% 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 USAP's Return on Equity is forecast to be high in 3 years time


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Past Performance

How has Universal Stainless & Alloy Products performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-42.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: USAP has a large one-off gain of $3.9M impacting its June 30 2022 financial results.

Growing Profit Margin: USAP became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: USAP has become profitable over the past 5 years, growing earnings by -42.8% per year.

Accelerating Growth: USAP has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: USAP has become profitable in the last year, making it difficult to compare its past year earnings growth to the Metals and Mining industry (82.4%).


Return on Equity

High ROE: USAP's Return on Equity (1.4%) is considered low.


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Financial Health

How is Universal Stainless & Alloy Products's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: USAP's short term assets ($188.4M) exceed its short term liabilities ($36.3M).

Long Term Liabilities: USAP's short term assets ($188.4M) exceed its long term liabilities ($87.4M).


Debt to Equity History and Analysis

Debt Level: USAP's net debt to equity ratio (37%) is considered satisfactory.

Reducing Debt: USAP's debt to equity ratio has reduced from 41.3% to 37.2% over the past 5 years.

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

Interest Coverage: USAP's interest payments on its debt are not well covered by EBIT (0.3x coverage).


Balance Sheet


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Dividend

What is Universal Stainless & Alloy Products's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Universal Stainless & Alloy Products Dividend Yield vs Market
How does Universal Stainless & Alloy Products dividend yield compare to the market?
SegmentDividend Yield
Company (Universal Stainless & Alloy Products)n/a
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.6%
Industry Average (Metals and Mining)3.4%
Analyst forecast in 3 Years (Universal Stainless & Alloy Products)n/a

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

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


Stability and Growth of Payments

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

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


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as USAP has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

8.3yrs

Average management tenure


CEO

Denny Oates (69 yo)

15yrs

Tenure

US$1,398,552

Compensation

Mr. Dennis M. Oates, also known as Denny, has been the Chief Executive Officer and President of Universal Stainless & Alloy Products, Inc. since January 02, 2008. Mr. Oates was Interim Principal Financial...


CEO Compensation Analysis

Denny Oates's Compensation vs Universal Stainless & Alloy Products Earnings
How has Denny Oates's remuneration changed compared to Universal Stainless & Alloy Products's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$3m

Mar 31 2022n/an/a

US$2m

Dec 31 2021US$1mUS$470k

-US$758k

Sep 30 2021n/an/a

-US$6m

Jun 30 2021n/an/a

-US$21m

Mar 31 2021n/an/a

-US$22m

Dec 31 2020US$871kUS$443k

-US$19m

Sep 30 2020n/an/a

-US$12m

Jun 30 2020n/an/a

-US$4m

Mar 31 2020n/an/a

US$2m

Dec 31 2019US$634kUS$450k

US$4m

Sep 30 2019n/an/a

US$5m

Jun 30 2019n/an/a

US$8m

Mar 31 2019n/an/a

US$10m

Dec 31 2018US$1mUS$442k

US$11m

Sep 30 2018n/an/a

US$18m

Jun 30 2018n/an/a

US$14m

Mar 31 2018n/an/a

US$11m

Dec 31 2017US$677kUS$427k

US$8m

Sep 30 2017n/an/a

-US$2m

Jun 30 2017n/an/a

-US$2m

Mar 31 2017n/an/a

-US$4m

Dec 31 2016US$1mUS$411k

-US$5m

Sep 30 2016n/an/a

-US$7m

Jun 30 2016n/an/a

-US$24m

Mar 31 2016n/an/a

-US$23m

Dec 31 2015US$611kUS$393k

-US$21m

Compensation vs Market: Denny's total compensation ($USD1.40M) is above average for companies of similar size in the US market ($USD781.86K).

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


Leadership Team

Experienced Management: USAP's management team is seasoned and experienced (8.3 years average tenure).


Board Members

Experienced Board: USAP's board of directors are seasoned and experienced ( 14.5 years average tenure).


Ownership

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.


Recent Insider Transactions

NasdaqGS:USAP Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
22 Feb 22BuyUS$74,975Dennis OatesIndividual8,194US$9.15

Ownership Breakdown

What is the ownership structure of USAP?
Owner TypeNumber of SharesOwnership Percentage
Individual Insiders441,0344.9%
General Public3,379,44037.7%
Institutions5,154,85757.4%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 57.84% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
8.16%
Minerva Advisors LLC
732,827$5.3m3.42%3.96%
5.86%
Royce & Associates, LP
525,587$3.8m-0.64%0.03%
5.47%
Columbia Management Investment Advisers, LLC
491,102$3.5m1.43%no data
5.42%
Dimensional Fund Advisors LP
486,367$3.5m-2.96%no data
4.86%
Privet Fund Management, LLC
436,257$3.1m0%10.72%
3.87%
The Vanguard Group, Inc.
347,230$2.5m-0.04%no data
2.82%
Wittenberg Investment Management Inc
253,363$1.8m23.98%0.82%
2.73%
JB Capital Partners
245,000$1.8m0%0.49%
1.77%
Russell Investment Management, LLC
159,181$1.1m-3.46%no data
1.73%
BlackRock, Inc.
154,838$1.1m1.91%no data
1.57%
Brandywine Global Investment Management, LLC
141,168$1.0m-12.75%0.01%
1.48%
Foundry Partners, LLC
132,610$956.1k19.62%0.06%
1.29%
Dennis Oates
116,179$837.7k0%no data
1.15%
Christopher Zimmer
103,275$744.6k0%no data
1.11%
CM Management, LLC
100,000$721.0k11.11%0.78%
1.09%
Acadian Asset Management LLC
97,877$705.7k0%no data
1.02%
Essex Investment Management Company, LLC
91,621$660.6k0%0.1%
1.02%
Bridgeway Capital Management, LLC
91,558$660.1k0%0.02%
1%
Renaissance Technologies LLC
89,428$644.8k-40.29%no data
0.89%
Geode Capital Management, LLC
80,131$577.8k1.22%no data
0.85%
Forest Hill Capital, LLC
76,082$548.6k0%0.23%
0.82%
Yehuda Toledano
73,789$532.0k0.55%no data
0.77%
Rodgers Brothers Inc., Asset Management Arm
69,250$499.3k0.73%0.11%
0.57%
Boston Partners Global Investors, Inc.
51,198$369.1k-11.06%no data
0.51%
Ancora Advisors LLC
45,846$330.6k0%no data

Company Information

Universal Stainless & Alloy Products, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Universal Stainless & Alloy Products, Inc.
  • Ticker: USAP
  • Exchange: NasdaqGS
  • Founded: 1994
  • Industry: Steel
  • Sector: Materials
  • Implied Market Cap: US$64.713m
  • Shares outstanding: 8.98m
  • Website: https://www.univstainless.com

Number of Employees


Location

  • Universal Stainless & Alloy Products, Inc.
  • 600 Mayer Street
  • Bridgeville
  • Pennsylvania
  • 15017
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
USAPNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDDec 1994
US6DB (Deutsche Boerse AG)YesCommon SharesDEEURDec 1994

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/03 00:00
End of Day Share Price2022/10/03 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


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.