Tecnoglass, Inc. – Value Analysis (NASDAQ:TGLS) : July 5, 2016

Capitalcube gives Tecnoglass, Inc. a score of 50.

Our analysis is based on comparing Tecnoglass, Inc. with the following peers – Ply Gem Holdings, Inc., PGT, Inc., Masonite International Corp., PPG Industries, Inc. and Huttig Building Products, Inc. (PGEM-US, PGTI-US, DOOR-US, PPG-US and HBP-US).

Investment Outlook

Tecnoglass, Inc. has a fundamental score of 50 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • Tecnoglass Inc. currently trades at a higher Price/Book ratio (6.32) than its peer median (4.76).
  • The market expects faster earnings growth from TGLS-US than from its peers and also a turnaround in its current ROE.
  • TGLS-US employs relatively high amounts of assets while generating relatively median profit margins.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • TGLS-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • The company is likely overinvesting in a business with only median returns.
  • TGLS-US might have enough interest coverage to take-on additional debt prudently.

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Leverage & Liquidity

TGLS-US might have enough interest coverage to take-on additional debt.

  • While TGLS-US‘s debt to enterprise ratio of 38.74% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 36.92%), it also enjoys a relatively high interest coverage level of 4.21x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • All 5 peers for the company have an outstanding debt balance.

TGLS-US has moved to a Some Capacity from a relatively high liquidity profile at the recent year-end.

  • TGLS-US‘s interest coverage is upward trending but is still within one standard deviation below its five-year average interest coverage of 252.30x.
  • Though its interest coverage increased to 4.21x from 3.67x (in 2015), its peer median remained relatively stable during this period at 4.32x.
  • TGLS-US‘s debt-EV is its highest relative to the last five years and compares to a low of 28.09% in 2013.
  • The increase in its debt-EV to 38.74% from 28.38% (in 2015) was also accompanied by an increase in its peer median during this period to 36.92% from 28.20%.
  • Relative to peers, debt-EV rose 1.65 percentage points.

Access the detailed analysis for Tecnoglass, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Ply Gem Holdings, Inc. 50.23 2.21 1.93 14.21
PGT, Inc. 35.09 3.56 3.76 17.76
Masonite International Corp. 19.08 2.49 4.44 37.66
PPG Industries, Inc. 12.93 1.47 15.31 52.81
Huttig Building Products, Inc. 42.12 1.94 7.22 30.73
Tecnoglass Inc. 38.74 1.24 4.21 22.43
Peer Median 36.92 2.08 4.32 26.58
Best In Class 12.93 3.56 15.31 52.81

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Company Profile

Tecnoglass, Inc. operates as a holding company, which engages in the design, manufacture, and trade of architectural glass. Its products include the following types of glass: laminated, thermo-laminated, tempered, silk-screened, curved, and digital print. It also distributes floating facades, bathroom dividers, automatic doors, and hurricane-proof and commercial display windows. It operates under the Alutions by TG and Alutions trademarks. The company was founded on September 21, 2011 and is headquartered in Barranquilla, Colombia.

Disclaimer

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