Twin Disc Inc (TWIN) stock analysis

P/E below its 5-year median

Twin Disc's P/E of 11.6 is below its own 5-year median of 16.7.

P/E below the industry

Twin Disc's P/E of 11.6 is below the General Industrial Machinery and Equipment median of 26.9.

EV/EBITDA above its 5-year median

Twin Disc's EV/EBITDA of 11.1 is above its 5-year median of 8.2.

P/B below the industry

Twin Disc's price-to-book of 1.65 is below the General Industrial Machinery and Equipment median of 2.84.

Trading below fair value

The share price of $25.02 is below our fair value estimate of $33.73.

Margin of safety over 20%

The price is 25.8% below fair value, more than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 11.2% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 35.4% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew 12.1% over the last twelve months; the General Industrial Machinery and Equipment median is 12.4%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 26.9% over the last twelve months, against 28.0% a year earlier.

Return on equity under 15%

Return on equity was 16.3% over the last twelve months and averaged 7.1% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 4.8%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Twin Disc's return on equity of 16.3% is above the General Industrial Machinery and Equipment median of 9.9%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 8.0% over the last twelve months, against a 5-year average of 3.7%.

Net margin below the industry

Twin Disc's net margin of 8.0% is below the General Industrial Machinery and Equipment median of 8.0%.

Low debt

Debt is 18.1% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 24.6% five years ago to 18.1%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 105% of total debt.

Interest well covered

Operating income covers interest expense 7.5 times.

Short-term assets cover short-term debts

Current assets are 2.46 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.44; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Twin Disc paid dividends worth 0.7% of the share price over the last twelve months.

Yield below Treasuries

The 0.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Twin Disc yields 0.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 7.9% of net income.

Covered by free cash flow

Dividends take 9.5% of free cash flow.