It's our 19th anniversary!

Build capital at the construction site without having to roll up your sleeves

Investment from 4,900 USD

Expires: 15/03/2019

yearly returns

Simpson Manufacturing is the world leader in the design, development, and production of connectors and construction materials for wooden (84% of revenue) and concrete (16% of revenue) structures. The company was founded in 1956 in California and has 1,800 employees. The distribution of revenue by country is as follows:

  • United States — 77.6%;
  • Canada — 4.4%;
  • France — 3.8%;
  • Great Britain — 2.4%;
  • Germany — 2.2%;
  • Poland — 2.1%;
  • Sweden — 1.7%;
  • Switzerland — 0.6%;
  • New Zealand — 0.3%;
  • Other countries — 4.9%.
The company's largest shareholders include: BlackRock (12.94%); Bank of New York Mellon (3.79%); Rockefeller Capital Management LP (0.77%); Goldman Sachs (0.71%).

Drivers of growth:

  • Successful continuation of the implementation of the strategy in the following key areas:
    • growth in production and sales of most marginal products (primarily building materials for concrete structures);
    • cessation of investment in the development of low-margin products;
    • increased presence on European markets;
    • increased investment in the development of specialised software for consumers from the construction sector (mobile apps, etc.);
    • cost reduction through the introduction of new technologies.
  • The company continues to show steady growth:
    • revenue growth was 13.5% in 2017, in 2016 and 2015 — 8.4% and 5.6%, respectively.
    • in 1Q2018 — 11.3% (YoY), and in 2Q2018 — 17.1% (YoY).
  • Profitability continues to grow, and the return on equity is as follows:
    • in 2015 — 7.92%;
    • in 2016 — 10.46%;
    • in 2017 — 10.58%.
    In the current year, this indicator reached 10.75% and 12.29% (in 1Q and 2Q, respectively), and the return on assets is as follows:
    • in 2015 — 7.02%;
    • in 2016 — 9.24%;
    • in 2017 — 9.18%.
    The company's return on assets in the current year amounts to 9.22% and 10.42% (in 1Q and 2Q, respectively). The ratio of net profit to revenue in 2017 was 9.3%, and this year, this figure rose to 10.0% in 1Q, and 14.3% in 2Q.
  • Simpson Manufacturing's shares are traded with the following discounts to peers:
    • EV/Revenue (16%);
    • P/E (5%).
  • Low risks to financial stability: the total debt to asset ratio is only 0.3, and the total debt to EBITDA ratio is 0.02. The net debt to EBITDA ratio is (-0.75%) due to a significant supply of free liquidity. The cash ratio, or absolute liquidity ratio, amounts to 0.92, which is a fairly high value.
  • It should be noted that the Sino-US trade war has had a limited impact on the company, since Simpson Manufacturing's primary sales are in the US (77.6% of revenue), while China accounts for less than 0.1% of revenue. Thanks to the introduction of reciprocal duties, (US and China), the company will be able to increase domestic sales by reducing the share of Chinese manufacturers in the US. A possible decline in Simpson Manufacturing shares in China will slightly affect its total revenue.

Investment period ends:

Expected yield is calculated according to 88% capital protection and the price of the base asset at expiry, equal to 71 USD.

Technical Analysis:

The company's share price is near the lower boundary of the long-term upward trend and is poised to go up from the Ichimoku cloud. The following are significant technical levels: 77.99 USD; 74.31 USD; 71.73 USD; 67.49 USD; 65.00 USD; 63.15 USD; 60.44 USD; 55.28 USD; 54.71 USD.


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