3 Reasons to Sell SXI and 1 Stock to Buy Instead
Is now the time to buy Standex, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it's free.
Despite the more favorable entry price, we don't have much confidence in Standex. Here are three reasons why SXI doesn't excite us and a stock we'd rather own.
A company's long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Standex's 3.4% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the industrials sector.
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Standex's EPS grew at an unimpressive 5.9% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its flat revenue and tells us management responded to softer demand by adapting its cost structure.
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Standex's margin dropped by 3.2 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Standex's free cash flow margin for the trailing 12 months was 5.1%.
Standex isn't a terrible business, but it isn't one of our picks. After the recent drawdown, the stock trades at 18.9× forward P/E (or $166.64 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn't great compared to the potential downside. We're fairly confident there are better investments elsewhere. We'd recommend looking at one of our all-time favorite software stocks.
Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
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