Last Update 19 Jan 26
Fair value Decreased 2.61%WOR: Future Acquisitions And Aggressive Buybacks Will Support Upside Potential
Analysts have trimmed their price target on Worthington Enterprises to about $67 from roughly $69, citing updates to their models that now use a slightly higher discount rate, more moderate revenue growth and profit margin assumptions, and a modestly lower future P/E multiple.
What's in the News
- Worthington Enterprises plans to pursue acquisitions, focusing on companies in niche markets with what it views as sustainable competitive advantages, as part of its approach to grow both organically and through acquisitions while aiming to increase margins (Key Developments).
- President and CEO Joseph Hayek reiterated that acquisitions are a key part of the company’s approach to optimizing its business and expanding in targeted areas (Key Developments).
- From September 1, 2025 to November 30, 2025, the company repurchased 250,000 shares, about 0.5% of its shares, for US$13.7 million under an ongoing buyback program (Key Developments).
- Since the buyback program announced on June 25, 2014, Worthington Enterprises has repurchased 24,032,319 shares, about 41.9% of its shares, for a total of US$1.01408b (Key Developments).
Valuation Changes
- Fair Value Estimate: Adjusted from US$69.00 to about US$67.20, a small reduction in the modeled value per share.
- Discount Rate: Raised from about 8.16% to about 8.67%, reflecting a slightly higher required return in the updated model.
- Revenue Growth: Updated from about 7.55% to about 6.19%, indicating more moderate growth assumptions in the forecast period.
- Net Profit Margin: Trimmed from about 14.86% to about 14.44%, suggesting a slightly more conservative view on profitability.
- Future P/E: Reduced from about 19.64x to about 19.09x, implying a modestly lower valuation multiple applied to future earnings.
Key Takeaways
- Strategic partnerships and new product launches are expected to drive revenue growth and market expansion for Worthington Enterprises.
- Investments in operational efficiencies and acquisitions are anticipated to improve margins and enhance earnings growth.
- Market uncertainties, price impacts, and M&A challenges could pressure revenue, margins, and net earnings, with risks from consumer sentiment and customer credit.
Catalysts
About Worthington Enterprises- Operates as an industrial manufacturing company.
- Worthington Enterprises is leveraging innovation to drive growth, as evidenced by the launch of new IoT-enabled and consumer products like SureSense and Balloon Time Mini, which are expected to increase revenues.
- The company is investing in operational efficiencies through facility modernization projects and automation, anticipated to improve net margins over time.
- Strategic partnerships and new market entry, like those with Tractor Supply and Walmart, are expected to expand distribution channels and support revenue growth.
- The integration of recent acquisitions, such as Ragasco, and enhanced M&A activity are anticipated to be accretive to margins and drive earnings growth.
- Worthington's low leverage and strong balance sheet offer flexibility for further growth initiatives, including M&A, which could positively impact EPS.
Worthington Enterprises Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Worthington Enterprises's revenue will grow by 7.6% annually over the next 3 years.
- Analysts assume that profit margins will increase from 8.3% today to 14.9% in 3 years time.
- Analysts expect earnings to reach $213.4 million (and earnings per share of $4.32) by about September 2028, up from $96.1 million today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, down from 32.8x today. This future PE is lower than the current PE for the US Machinery industry at 24.7x.
- Analysts expect the number of shares outstanding to decline by 0.87% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.16%, as per the Simply Wall St company report.
Worthington Enterprises Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Market and trade uncertainties, such as tariffs and trade-related issues, could impose cost pressures and supply disruptions, potentially affecting future revenues and margins.
- Decreasing steel prices have negatively impacted equity earnings from joint ventures like ClarkDietrich, leading to margin compression, which could impact earnings.
- Macro-economic uncertainties and potential changes in consumer sentiment could impact demand in the Consumer Products segment, affecting revenues and profitability.
- A headwind was noted from the bankruptcy of a customer, which could indicate potential credit risks or bad debts impacting net earnings.
- M&A and expansion initiatives may not yield the anticipated growth or could stretch resources, thereby presenting risks to net margins and earnings if integrations do not proceed smoothly.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $69.0 for Worthington Enterprises based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $81.0, and the most bearish reporting a price target of just $50.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $213.4 million, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 8.2%.
- Given the current share price of $63.26, the analyst price target of $69.0 is 8.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
