Is Hillman Solutions Corp. Overvalued by 33%?

Hillman Solutions Corp. is estimated to be 33% undervalued based on its projected fair value of $14.99, compared to its current share price of $10.07. The fair value estimate is 23% higher than Hillman Solutions' analyst price target of $12.16. The company's 2-stage free cash flow to equity valuation method is used to estimate its attractiveness as an investment opportunity.

Hillman Solutions Corp. (NASDAQ: HLMN) has recently been under the spotlight due to a significant discrepancy between its current share price and its estimated fair value. According to a recent analysis by Simply Wall St, Hillman Solutions is estimated to be undervalued by approximately 33%. The fair value estimate stands at $14.99, which is 23% higher than the analyst price target of $12.16 [1].

The analysis employed a 2-stage free cash flow to equity valuation method, a widely used technique in the financial industry. The first stage, which spans the next ten years, projects cash flows based on growth rates estimated by analysts. The second stage, or terminal value, accounts for all future cash flows beyond the initial period, using the Gordon Growth formula and a discount rate of 8.9% [1].

Key Insights:
- The projected fair value for Hillman Solutions is $14.99 based on a 2-stage free cash flow to equity model.
- The current share price of $10.07 suggests that Hillman Solutions is potentially 33% undervalued.
- The analyst price target for HLMN is $12.16, which is 23% lower than the estimated fair value.

Strengths and Weaknesses:
- Hillman Solutions exhibits strong earnings growth, with its earnings exceeding the industry average over the past year.
- The company's debt is well covered by cash flow.
- However, interest payments on debt are not well covered, and annual revenue growth is forecast to be slower than the American market average.

Opportunities and Threats:
- Annual earnings are forecast to grow faster than the American market, presenting an opportunity for investors.
- The company is trading below its estimated fair value by more than 20%, indicating potential undervaluation.
- A threat lies in the slower-than-average revenue growth forecast.

Conclusion:
Hillman Solutions Corp. presents an attractive investment opportunity based on its projected fair value. The company's 33% undervaluation suggests that investors may be able to benefit from a potential price increase. However, it is essential to consider the risks and weaknesses identified in the analysis before making an investment decision.

References:
[1] https://news.futunn.com/en/post/60876014/are-investors-undervaluing-hillman-solutions-corp-nasdaq-hlmn-by-34