The company's end market is the wholesale electrical distributors, which the company supplies largely through independent manufacturers' representatives in the United States, and secondarily, through direct in-house marketing.

The BusinessĮncore is a low-cost manufacturer of electrical building wire and cable, made with copper or aluminum. In the TTM period, the company has a ROIC of 87.8%. The company's low-cost, highly profitable business is reflected in the company's return on invested capital (ROIC), which has risen from 14.8% in 2017, to 78.1% in 2021. The company's balance sheet reflects the conservative management that the company has enacted, with the company having more than $469 million in cash in the TTM period, up from $439 million in 2021. In the TTM period, FCF has continued to grow, rising to nearly $488 million. Again, the company has shown an incredible amount of growth. In the TTM period, net income has risen to more than $689 million.įree cash flow (FCF) has risen from $26.26 million in 2017, to more than $300 million in 2021, at a 5-year FCF CAGR of 62.79%. Only 0.9% of firms have been able to achieve a similar level of success. Net income has risen sharply from $67 million in 2017, to over $541 million in 2021, for a 5-year net income CAGR of 51.87%. This is in comparison with the 11% average for industrials, according to Credit Suisse's research. In the TTM period, operating profit margin has risen to 29.9%, showing that this trend has continued through this challenging economy. This again reflects the growing profitability of the firm. Operating profit margin has increased from 6.8% in 2017 to 27%. This shows that profitability continues to improve in the TTM period. In the trailing twelve months (TTM), gross profitability has risen to 0.60. Gross profitability has risen from 0.21 in 2017, to 0.56 in 2021, well above the 0.33 threshold that Robert Novy-Marx' research says characterizes attractive stocks. In the TTM period, revenue has risen to nearly $2.97 billion. According to Credit Suisse's The Base Rate Book, just 6% of firms enjoyed a similar level of growth between 19. In the last five years, revenue has grown from just over $1.16 billion in 2017, to over $2.59 billion in 2021, representing a 5-year revenue compound annual growth rate (CAGR) of 17.37%. The company's strong stock market performance is a reflection of the strong financial performance of the business in the last 5 years. While results are poor, the stock remains superior to the broad market. Year-to-date, the company's stock has declined by 14.08%, compared to 24% for the Russell 3000 and 23.31% for the S&P 500. In the last five years, Encore has sharply overperformed the Russell 3000 and S&P 500, gaining 163.92% compared to 40.82% for the Russell 3000 and 44.29% for the S&P 500. The company is a long-term investor's dream. This is because the company's underlying business is uniquely good, with strong competitive advantages and stellar financial performance.

Even in the year-to-date period, when its stock has been down, the company is still doing better than the overall market. Electrical wire and cable manufacturer Encore Wire Corporation ( NASDAQ: WIRE) has led the market for the last five years.

Encore wire corporation stock