It's all well and good to state the obvious that we are indeed in a cyclical downturn in housing construction, but 2021-2023 was abnormal in terms of business performance and shouldn't, imo, be the basis of future expectations. For reference, here is ROIC and EBIT margins. Unless you believe that from 2017-2020 construction was in a slump then the washout here is margins reverting. It doesn't require being bearish to square out how you can get to this being at best fairly priced and, perhaps, with another 20% downside from here. The bull case seems to rest on the idea of the pandemic years being what mid-cycle earnings look like.
I wouldn't bother with anything NAOS says. Incredible capital allocation that a fund that size has a 35% stake in an illiquid, deeply cyclical, small cap construction co. Just bizarre.
BRI Price at posting:
$1.60 Sentiment: None Disclosure: Not Held
