Atkore Q2’18 Recap: Solid beat and guidance raise despite inflationary pressures

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A common theme in building products and other industries has been cost inflation this year compared to last. Some companies have great raw material pass-throughs and are able to maintain margins well, others are important enough to their customers to pass price in when needed and ad hoc, and others are less lucky.

Back when I wrote about ATKR first, I was skeptical that it had anything “magic” in its business… it was just a stupid cheap stock. But based on this Q’s results, its clear that their strong market share in electrical raceways has pricing power. While Mechanical products isn’t as lucky, it also is experiencing strong volume growth.

The Electrical Raceway segment is pictured on the left and the MP&S segment is on the right.

As you can see below, ATKR gained meaningful margin in ER which helped offset the decline in MP&S.

ATKR Q2'18

Bottom line: We’re up 25% in a short time period since I wrote about ATKR, but I still think this is a mid-$30 stock on reasonable estimates. I think we still have at least 30% more upside to go!


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