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We came across a bullish thesis on Core Molding Technologies, Inc. (CMT) on Substack by Tyler Moody. In this article, we will summarize the bulls’ thesis on CMT. Core Molding Technologies, Inc. (CMT)'s share was trading at $15.19 as of April 22nd. CMT’s trailing and forward P/E were 10.06 and 8.83 respectively according to Yahoo Finance.
A massive electric truck rolling off the assembly line at the Lordstown, Ohio factory.
Core Molding Technologies (CMT), a $138 million market cap company based in Columbus, Ohio, specializes in injection molded plastic with a primary focus on the medium and heavy-duty truck market, which generates over half of its revenue. The remainder is split across powersports, building products, industrial, utilities, and other segments. Although 2024 saw a 15% revenue decline to $302 million—down from a peak of $377 million in 2022—gross margins held steady at 17.6%, slightly exceeding the five-year average of 15.7%. Despite flat fourth-quarter results, the company delivered full-year EPS of $1.50, with a consistent five-year operating margin of 5.5% and return on assets averaging 5.9%.
CMT maintains a solid balance sheet with $42 million in cash, just $19.7 million in debt, and a conservative debt-to-equity ratio of 0.13. The company has made acquisitions but offers limited shareholder returns, with no dividend and a modest buyback program likely designed to offset stock option dilution. Notably, it generated $23.6 million in free cash flow in 2024—buoyed by favorable working capital changes—significantly above its five-year median of $15.4 million. This high free cash flow yield brought CMT onto value screens, suggesting potential mispricing.
Given the company’s typically positive ROA and conservative financials, valuation based on earnings power seems appropriate. Using a five-year median operating profit of $17.6 million, a 22% tax rate, and a 9% discount rate yields an enterprise value of $152.2 million. After adjusting for cash and debt, the implied equity value is about $174.7 million, or roughly $20.10 per share. With current prices slightly below this estimate, CMT could represent a compelling value opportunity for patient investors willing to bet on cyclical recovery and solid operational execution in a niche manufacturing business.
Core Molding Technologies, Inc. (CMT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held CMT at the end of the fourth quarter which was 8 in the previous quarter. While we acknowledge the risk and potential of CMT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.