The Shyft Group (SHYF), valued at $525 million by market cap, is a specialty vehicle manufacturer, assembly, and uplift company for commercial, retail, and service vehicle markets. Its customers include first-to-last-mile delivery companies across sectors.
While SHYF has trailed the broader markets in the last three years, the small-cap stock gained momentum following its Q2 results, and ended the month of July on a gain of more than 41%. The stock has retreated sharply so far in August, down 18% from its July 31 annual highs amid resurgent recession fears.
As a result, SHYF has now largely filled its post-earnings bull gap, though the shares have yet to stabilize near short-term support.
Longer term, the strong demand for battery-powered vehicles should act as a massive tailwind for the company in the future. Let’s see what’s driving SHYF higher, and whether it makes sense to invest in this small-cap stock at the current multiple.
The Shyft Group Reports Q2 Results
In Q2 of 2024, the Shyft Group reported revenue of $192.8 million, down 14.4% year over year. Its adjusted net income narrowed from $8.7 million, or $0.25 per share, to $5.3 million, or $0.16 per share, in the last 12 months.
The Shyft Group reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $12.5 million, down from $15.9 million in the year-ago period. Additionally, its consolidated backlog of $354.4 million was 30.5% lower than last year's backlog of $510.2 million.
During its earnings release, Shyft Group also announced its acquisition of Independent Truck Upfitters (ITU), a service body and work truck upfitter based in the Midwest. The acquisition should align with Shyft’s specialty vehicles and infrastructure-focused growth strategy.
ITU serves utility, construction, and fleet management companies with custom solutions and aftermarket accessories. It specializes in larger vehicles and complex service body up-fitting and should help Shyft enter new markets and gain traction across higher-class-sized products.
DA Davidson is Bullish on SHYF Stock
Investment bank DA Davidson is bullish on The Shyft Group, with the brokerage arguing that the vocation truck vertical is positioned for rapid growth. According to DA Davidson, Shyft’s acquisition of ITU is a “home run.” The positive comments came alongside an upgrade for SHYF from “Neutral” to “Buy,” and a price-target hike to $18 - a new Street-high for the lightly covered shares.
DA Davidson emphasized that Shyft’s Service Body business performed well and the production of Super Duty chassis reached its highest level in 27 years. The firm also believes that the Service Body business should continue to perform well as Ford Motor (F) disclosed plans to increase Super Duty production capacity by 25%.
In May 2024, The Shyft Group announced that FedEx (FDX) placed a purchase order for 150 Blue Arc EV Trucks. These electric trucks will be integrated with FedEx’s pickup and delivery fleet in the U.S. as the logistics giant accelerates the adoption of commercial-grade EVs.
Is SHYF Stock a Good Buy Right Now?
Out of the four analysts covering SHYF stock, two recommend “strong buy” and two recommend “hold,” for a split consensus of “moderate buy.”
The average 12-month target price for SHYF stock now stands at $15.33, about 6.7% north of current levels.
According to consensus earnings estimates, The Shyft Group is forecast to expand its adjusted earnings per share to $1.10 per share by 2028. So, priced at 30x forward earnings, the stock could trade at $33 per share, indicating an upside potential of over 100% from current levels.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
