Brazil expansion puts XPEL’s growth ambitions in focus
XPEL (XPEL) just opened a new Brazil headquarters, warehouse and training center in São Paulo, creating a direct link to local dealers and spotlighting how investors might think about the stock’s international footprint.
The Brazil move comes after a softer patch in the chart, with the share price down 14.13% year to date at US$43.14 but supported by a 20.91% total shareholder return over the past year. This suggests that investors have been willing to look past short term volatility in favor of the longer story.
Scan beyond XPEL’s Brazil push and explore additional car-related businesses with strong fundamentals and international reach through our curated list of solid balance sheet and fundamentals (24 results)
XPEL has a fresh Brazil hub, a share price that has cooled this year, and a solid 1 year total return. Is that enough to justify paying up now instead of waiting for a cheaper entry point as valuation comes into focus next?
Most Popular Narrative: 30% Undervalued
Against XPEL’s last close at $43.14, the most followed valuation story pins fair value closer to $61.67. This implies a sizeable gap that investors need to judge for themselves.
Increasing vertical integration through the planned US$110 million manufacturing and supply chain build out in San Antonio and China, supported by recent term debt and record operating cash flow, is expected to replace an asset light sourcing model with in house production. This could structurally lift gross margin and operating margin as facilities ramp.
See why 18 investors see XPEL as 30% undervalued.
Result: Fair Value of $61.67 (UNDERVALUED)
Still, higher competition from lower cost Asian producers and any setback in the US$110 million manufacturing rollout could quickly challenge the XPEL upside narrative.
Find out about the key risks to this XPEL narrative.
Next Steps
With both risks and bright spots on the table for XPEL, it helps to move quickly, test the numbers yourself and decide where you land. To weigh those trade offs in one place, start with the 4 key rewards and 1 important warning sign
Looking for more investment ideas beyond XPEL?
If XPEL has sharpened your focus, do not stop here. Fresh ideas often come from comparing a few different angles side by side.
- Target resilient compounding by reviewing companies with dependable balance sheets and cash flows through our list of solid balance sheet and fundamentals (24 results).
- Hunt for potential upside by scanning companies that combine quality metrics with pricing that screens as cheaper using our 29 high quality undervalued stocks.
- Prioritize defense and capital protection by shortlisting companies that earn lower risk scores across key fundamentals inside our 30 resilient stocks with low risk scores.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com