Mistras Group is a leading provider of non-destructive testing (NDT) and related asset protection services that monitor the condition of critical infrastructure and equipment to ensure safe and efficient operations and maximize uptime. The company’s business has suffered during the pandemic from the decline in usage that temporarily reduced the frequency of maintenance and repair. Although its revenue has rebounded well off the lows, its 21Q3 performance and 21Q4 guidance suggest at least a pause in its recovery. Accordingly, investors may be concerned that its recovery will be incomplete.
Although Mistras has proprietary skills and experience in critical infrastructure, its services are subject competition from advances in technology, including the internet of things, and the increasingly widespread use of sensors. To its credit, Mistras has upgraded its offerings, especially its deployment of sensors that work in tandem with its core NDT technologies and has launched related services, such as its OneSuite application platform, that allow customers to manage all aspects of equipment and infrastructure maintenance. While these growth initiatives may serve to protect Mistras’s competitive position, it is still unclear whether they will contribute meaningfully to the company’s top and bottom lines.
These concerns are reflected in the company’s stock price performance. After recovering sharply from the pandemic lows, Mistras’s stock peaked in March of this year at $12.57 and has been sliding steadily ever since (and at a faster rate since reporting disappointing 21Q3 results and 21Q4 guidance). Yet, Mistras should be able to deliver better earnings in 2022, which should lift the stock from its recent lows.
My projections, which are consistent with consensus, anticipate earnings of $0.19 for 2021 and $0.63 per share for 2022. Accordingly, I have set a price target of $9.00 and given the stock a STRONG BUY performance rating. My price target of $9.00 represents a forward multiple of 14.3 times my 2022 EPS estimate.
This is a summary of my full report on Mistras Group, Inc. (MG). To obtain a copy of the full report, reach out to me at the telephone number or email address listed below.
December 15, 2021
Stephen P. Percoco
16 W. Elizabeth Avenue, Suite 4
Linden, New Jersey 07036
© 2021 by Stephen P. Percoco, Lark Research. All rights reserved.