The average target price of MEC is 21 and suggests 33% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 29.0. This translates into 84% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 17.0. This suggests 8% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Mayville Engineering Company, Inc., together with its subsidiaries, operates as a contract manufacturer that serves the heavy and medium duty commercial vehicle, construction and access equipment, powersports, agriculture, military, and other end markets in the United States. The company provides a range of prototyping and tooling, production fabrication, coating, assembly, and aftermarket components. It also supplies engineered components to original equipment manufacturers. The company was founded in 1945 and is headquartered in Mayville, Wisconsin.

Mayville Engineering Company, Inc.

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

MEC reported revenue of USD 556mn in the last 12 months, down 4% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 13% from FY24 to USD 1.09. Market expects EPS to reach USD 0.61 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 2ppts over six months and grown 24ppts faster in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 2ppts over the past six months and grew 21ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 10.3% in the last 12 months, up from 7.9% in FY23. 

Historically, MEC has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.1%, a growth from 1.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.7% in the last 12 months, an increase from 1.6% in FY23. The market analysts predict that RoA will be 1.3% in FY24, again weaker than its peers. 

Mayville Engineering Company, Inc. reported a return on equity (RoE) of 9.5% in the last 12 months, up from 3.5% in FY23. The market consensus projects an RoE of 2.8% in FY24, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 5.5%, below the peers. The consensus estimate for FY24 for RoCE is 1.7%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.6 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

MEC has average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually quite stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note solid cash flow generation, among the positive credit factors. Among the negative credit factors and we point to slow historical revenue growth, an unfavourable capital structure.

In highly turbulent market conditions, MEC is highly volatile. In other words, the stock will fall substantially more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be significant. 

In normal market circumstances, MEC is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Mayville Engineering Company, Inc.

$ 15.94

4

Mayville Engineering Company, Inc.

$ 15.94

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 15.94

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