Cadre Holdings: Ignore The Cybersecurity Noise -- This Stock Is Primed For Growth

Core Viewpoint - Cadre Holdings, Inc. is viewed as a buy from a fundamental perspective despite recent challenges, including a cybersecurity incident and shareholder dilution [3][8]. Financial Performance - Sales grew by 19.2%, driven by acquisitions and increased demand for armor and duty gear products [4]. - Cost of goods increased by 21.8%, impacting gross margins, which decreased to 40.6% from 41.9% in the previous year [4]. - Operating income rose by 25.6% to nearly $20 million, with adjusted EBITDA growing by 24$28.3 million [4]. Guidance and Projections - For 2024, Cadre Holdings expects sales between $571 million and$582 million, indicating a 19.5% growth at the mid-point [5]. - Adjusted EBITDA is projected to be between $103 million and$109 million, reflecting a year-on-year growth of 23.5% [5]. - The guidance for adjusted EBITDA has not been raised due to a cybersecurity incident affecting Q3 productivity [5]. Risks and Opportunities - The company faces risks related to potential shareholder dilution from M&A activities and a significant amount of debt maturing in 2026 [6]. - Opportunities exist due to a heightened global threat environment driving budgets for public safety services and the potential for margin expansion through M&A [6]. Stock Valuation - EBITDA estimates for 2024 and 2025 have been increased by approximately 17% and 30% for free cash flow estimates, respectively [7]. - The price target has been lifted to $46.25, indicating a 28% upside from current levels, with projections showing potential for 70% upside in the coming years [7]. Conclusion - Cadre Holdings is considered an attractive investment opportunity, with ongoing growth potential through acquisitions and margin expansion despite recent challenges [8].