Q: It’s been a little while since the last 5i report and even the last question on ADN. It’s 10 year performance looks quite impressive to me. Could you please provide updated thoughts and outlook on this one based on todays economic environment? Thank you!
5i Research Answer:
In the last year, ADN saw it's price see a slight drawdown, but total return was up by 3%. ADN continues to be a solid dividend payer with a yield of 7.14% while payout ratio is quite good at 37.36%. From a valuation perspective, trading at 25.9x forward earnigs seems expensive, but it also trades at 0.9x price-to-book which is attractive. We think that ADN could benefit from tailwinds related to housing shortages as well as interest rates being peaked. The lumber industry can experience cyclicality, but we like the industry outlook and it trades at an intriguing valuation multiple. EPS is forecasted to see a drawdown in 2024 but then rebound in 2025.