Hi there,
Supremex is an interesting company. As one that operates in the packaging industry, increased online activity has the potential to help sales. Unfortunately, the company's share price has crated since the pandemic and has yet to rebound.
There are a couple of reasons for this. It is having issues with the commissioning of its new Durabox facility and this led to the company losing a big customer which "weighed heavily on our operating profitability". It acquired Durabox in 2016, but it has been a drag on results over the past year. It looks that the loss of that customer will also impact profitability over the next few quarters.
The company is seeing strong growth in the U.S. Envelope market being offset by weak, declining business in Canada. This inconsistency is also weighing on the company's share price.
The company is trading at what looks like cheap valuations (P/E of 4.17). However, expectations for negative earnings growth has the P/E rise to 9.75 based on forward sales.
This is a company that is operating in an industry that is ripe for growth in the current environment. However, it appears to be having execution issues. I can't speak to the quality of management and their ability to turn operations around as I have not been following the company long enough to comment. However, it has missed estimates in 9 of the past twelve quarters in 4 of the past 5.
To me, it appears to be a speculative play on rebound potential assuming they can get start to deliver.
Mat