Vishay Precision Group, Inc.

VPG Details

Vishay Precision Group, Inc. (NYSE: VPG) designs and sells sensors, sensor-based measurement systems, specialty resistors, and strain gauges based on proprietary technologies. Foil Technology Products, Force Sensors, and Weighing and Control Systems are the company's product divisions. It does business in the United States and other nations.

Q3FY21 Results:

• Growth in Revenues: The company reported a 21.40% rise in net revenues to USD 81.97 million in Q3FY21 (ended October 02, 2021) from USD 67.53 million in Q3FY20 (ended September 26, 2020), primarily owing to higher volume in the Forces Sensor and Weighing and Control Systems reporting segments.
• Flat Bottomline: Its net income in Q3FY21 was USD 5.45 million, a slight decline from the USD 5.66 million reported in Q3FY20.

• Balance Sheet Position: The company ended Q3FY21 with a cash balance of USD 75.54 million and total outstanding debt of USD 60.69 million.
• Improved Book to Bill Ratio: VPG reported a book to bill ratio of 1.21x in Q3FY21 compared to 0.95x in Q3FY20, indicating that its sales may improve in future periods.

Key Risks:

• Trade Tariff Risk: VPG manufactures in China, Europe, Canada, Israel, and the United States, among other countries. As a result, any significant increase in tariffs or other restrictions on imports to the United States could harm the company's operations and finances.
• Currency Fluctuation Risk: VPG derives a significant amount of its revenue in currencies other than USD, exposing it to currency volatility risk.

Outlook:

• Q4FY21 Estimates: VPG announced in its Q3FY21 announcement that it expects to generate between USD 86 and 94 million in revenue in Q4FY21, based on constant Q3FY21 exchange rates. 

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation   

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

VPG's share price has fallen 19.25% in the past month and is currently leaning towards the lower end of the 52-week range of USD 29.22 to USD 39.71. The stock is currently trading far below its 50 and 200 DMA levels, and its RSI Index is at 30.17, approaching the oversold zone. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 37.16.

Considering the company's growth prospects, improved financial metrics, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the current price of USD 30.07, down 3.22% as of January 28, 2022, 2:27 PM ET.

Three-Year Technical Price Chart (as of January 28, 2022). Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

American Public Education, Inc.

APEI Details

American Public Education, Inc. (NASDAQ: APEI) offers online and on-campus postsecondary education to ~107,800 students through its three subsidiary institutions, namely American Public University System, Inc. (APUS), Rasmussen University (RU) National Education Seminars, Inc. (also known as Hondros College of Nursing - HCN). APEI generates revenue from course registrations and enrollments, instruction services, tuition, and other fees.

Latest News:

• Recent Acquisition: On January 03, 2022, APEI stated that it had completed the acquisition of substantially all the assets of Graduate School USA (GSUSA) effective January 1, 2022. GSUSA is a renowned federal workforce training provider with a diverse portfolio of government agency clients. The acquisition expands APEI's focus on training and degrees that help people find employment and enhance their careers.

Q3FY21 Results:

Source: Company Filing

• Double-Digit Growth in Revenue: The company witnessed a YoY growth of 24.16% in revenues to USD 98.25 million in Q3FY21 (ended September 30, 2021) compared to USD 79.13 million in Q3FY20, driven by the acquisition of Rasmussen University.
• Decline in Profitability: APEI reported a net loss of USD 0.27 million in Q3FY21 vs. a net income of USD 2.64 million in Q3FY20, on account of increase in costs and expenses.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 141.49 million and total debt of USD 162.09 million.

Key Risk:

• Dependence on Tuition Assistance: Tuition Assistance (TA) is available to members of the US Armed Forces based on their branch of service. Students enrolled in TA accounted for 43% of APUS' adjusted net course registrations in FY20. As a result, any reduction or suspension of TA to APUS by the Department of Defense (DoD) could have a negative impact on the company's financials.

Outlook:

Operational and Financial Outlook. Source: Company Presentation, Q3FY21

Valuation Methodology: EV/Sales Multiple Based Relative Valuation(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

APEI's share price has declined 32.55% in the past nine months and is currently leaning towards the lower-band of its 52-week range of USD 18.11 to USD 39.19.  We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 24.94.

Considering the significant correction in the stock price in the past nine months, strong top line performance, recent acquisitions, high gross margin, low leverage, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 20.545, up 0.42% as of January 28, 2022, 01:33 PM ET.

One-Year Technical Price Chart (as on January 28, 2022, 01:33 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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