ADEN operates as a distributor of architectural building products. The stock is now trading at 8.4x times' Forward P/E. In the 1Q, ADEN’s revenue declined by-10% to $579M, beating the estimates of $578M and EPS was $0.47 beating estimates of $0.42. The balance sheet is leveraged, with net debt of $674M. Net debt to EBITDA in the trailing twelve-months is 3.0x. Based on consensus estimates, sales are expected to decline by -13% in 2023. The company has been growing quite impressively in the last five years, as sales grew 26% on average, ADEN currently experiences a headwind though due to a drop in lumber prices, which we think may be temporary (if rates peak). Overall, we think the company has a track record of decent execution, and near-term headwind may offer attractive entry points here, for those willing to accept the leverage and willing to ride out a possible recession.
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