1. Executive Summary
- Company: Ampco-Pittsburgh Corporation
- Ticker: AP (NYSE)
- Industry: Industrial – Specialty Metals & Custom Equipment
- Investment Rating: Hold
- Current Price: $2.74 (as of May 17, 2025)
- 52-Week Range: $0.74 – $3.12
- Key Takeaways: Returned to profitability in Q1 2025, EBITDA improved despite revenue decline, but high debt ratio and small market cap pose risk.
2. Company Overview
- Business Model: Ampco-Pittsburgh manufactures specialty metal components and custom-engineered equipment, primarily forged and cast rolls, air handling systems, and pumps.
- Market Position: A key supplier to global steel and aluminum manufacturers.
- Core Products: Forged/cast rolls, air and liquid handling systems, centrifugal pumps.
- Management: Brett McBrayer is CEO and led the Q1 2025 earnings announcement.
3. Financial Analysis
- Revenue: Q1 2025 revenue was $104.3 million, down 5% year-over-year.
- Net Income: $1.1 million in Q1 2025, an improvement of $3.8 million YoY.
- EPS: $0.06 in Q1 2025, compared to a loss of $0.14 a year earlier.
- Balance Sheet: Debt-to-assets ratio of 1.57 indicates financial pressure.
- EBITDA: Adjusted EBITDA improved to $8.8 million, up $3.7 million YoY.
4. Stock Performance
- 52-Week Trend: Traded between $0.74 and $3.12 over the past year.
- Dividends: No dividends paid.
- Volatility: Beta = 0.66, indicating lower-than-market volatility.
- Recent Activity: Up 0.47% on May 17, 2025.
5. Valuation Analysis
- P/E Ratio: Approximately -1.27× (reflecting prior losses).
- P/S Ratio: ~0.44× — undervalued based on revenue.
- P/B Ratio: ~0.91× — trading below book value.
- DCF Analysis: Not publicly disclosed.
- Peer Comparison: Undervalued vs. industry peers, with turnaround potential if profitability is sustained.
6. Industry & Market Analysis
- Trends: Increasing demand from nuclear, defense, and industrial sectors.
- Market Share: Significant global supplier of forged and cast rolls.
- Macro Factors: Vulnerable to global supply chain disruptions and currency volatility.
7. Risk Analysis
- Market Risk: Sensitive to global steel/aluminum demand fluctuations and supply issues.
- Financial Risk: High leverage and micro-cap valuation raise financial sustainability concerns.
- Regulatory Risk: Exposure to environmental and product compliance regulations.
- Geopolitical Risk: Currency shifts and supply chain fragility could impact operations.
8. Growth Catalysts
- Product Demand: Expected rise in demand from nuclear energy, military, and pharma sectors.
- Efficiency Initiatives: U.S.-based manufacturing investments aimed at boosting productivity.
- M&A: No recent mergers or acquisitions reported.
- Sector Tailwinds: Defense and energy infrastructure trends support long-term growth.
9. Analyst Sentiment
- Consensus Rating: Analysts currently suggest a Hold stance.
- Target Price: Average analyst price target = $5.00.
- Recent Update: Q1 2025 earnings reported on May 12 showed positive net income and EBITDA growth despite revenue headwinds.
10. Conclusion
Ampco-Pittsburgh is showing signs of a turnaround with improved profitability and operational efficiency. However, its high debt, low market cap, and sector sensitivity make it a higher-risk investment. We recommend a Hold rating, with close monitoring of future financial performance and macroeconomic indicators.