Investing.com – Jefferies initiated coverage on Suncrete Inc (NASDAQ:RMIX) with a Buy rating and set a price target of $19.00. The stock currently trades at $15.60, representing potential upside of roughly 22% to the analyst’s target, following a strong 38% gain over the past six months.
Analyst Philip Ng said the company, a scaled ready-mix concrete producer, has demonstrated the ability to generate 20% EBITDA margins in well-structured markets. Jefferies projects EBITDA will triple in two years and could double again by 2030. The company generated $40.4 million in EBITDA over the last twelve months on revenue of $194.87 million, though InvestingPro notes the company was not profitable during this period. Investors can access 8 additional ProTips for deeper analysis of Suncrete’s financial outlook.
The firm noted that while investors typically view ready-mix as a low-barrier-to-entry business with structurally thin margins, scaled producers with capital and operational expertise like Suncrete and market leader SRM Concrete have achieved approximately 20% EBITDA margins. Public heavy materials companies have historically struggled to generate EBITDA margins above the low teens in ready-mix.
Suncrete’s scale drives route density and procurement benefits, according to Jefferies. Management focuses on operational key performance indicators and takes a disciplined approach to pricing.
The company is positioned in the Sunbelt, where states in which Suncrete operates or targets have outgrown the national market by 5.5% since 2019 due to favorable population migration and large infrastructure and commercial projects, Jefferies said.
In other recent news, Suncrete, Inc. announced its acquisition of Hope Concrete, LLC. This strategic move allows Suncrete to enter the Texas and Louisiana markets, expanding its reach beyond its current operations in Oklahoma and Arkansas. Hope Concrete operates 10 plants and 88 mixer trucks in North Texas and Southern Louisiana. The acquisition is intended to serve as Suncrete’s platform for future growth in Texas. This development marks a significant expansion for Suncrete, reflecting its commitment to increasing its market presence. The company’s recent actions suggest a focus on strategic growth through acquisitions. The move is expected to bolster Suncrete’s operational capacity in the concrete industry. The acquisition was confirmed in a press release statement.
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