After Surging, Mayville Engineering Company Deserves More Upside

Core Viewpoint - Mayville Engineering Company has shown significant financial improvement, leading to a strong buy rating due to its undervalued shares and positive growth trajectory [1][8]. Financial Performance - Revenue for the first half of 2024 reached $324.9 million, a 15.4$281.6 million in the same period last year, driven by organic sales and an acquisition [2]. - Net income nearly doubled from $4.2 million to$7 million, with adjusted net profits growing from $7.6 million to$10.1 million [3]. - Operating cash flow improved from negative $5.9 million to positive$33.9 million, and EBITDA rose from $29.1 million to$38.2 million [3]. Quarterly Insights - In the second quarter of 2024, revenue increased by 17.7% year-over-year to $163.6 million, with net income growing from$1.6 million to $3.8 million [3]. - Adjusted operating cash flow soared from$0.2 million to $23.3 million, and EBITDA expanded from$15.3 million to $19.6 million [3]. Future Projections - Management anticipates full-year 2024 revenue between$620 million and $640 million, representing a 7.1$72 million and $76 million, with adjusted operating cash flow anticipated at$38.5 million [4]. Valuation Metrics - Mayville Engineering Company is valued attractively compared to peers, with a price to operating cash flow of 10.3 and an EV to EBITDA of 7.0, lower than five comparable firms [6]. - Future market capitalization could reach $642.7 million, suggesting an annualized return of 21.4$750 million to $850 million for the 2026 fiscal year, with EBITDA expected between$105 million and $135 million [5].