Hi there,
MRS has jumped in price due to its exposure to the PPE space. Given we are in a pandemic - PPE is critical and demand has soared. You can see the impact on financials as well as revenue has skyrocketed from $25M to $75M over the past twelve months. Worth noting that as of the last update, it had secured $96M in orders to be delivered by end of March 2021 with the potential for $300M more orders on that contract. So that is 112M spread out over the next two quarters. It hasn't reported Q4 results yet, so not sure how much will come this quarter and next quarter.
My issue is whether or not this growth can be sustained after this initial surge. Prior to the pandemic, it had little to no growth. It also has not announced any more orders or contract wins since that last update which came in early October. So it has effectively been more than 4 months without news of a contract win. Does this mean contracts are drying up? Worth monitoring.
Likewise, one of its subsidiaries (Unifire) lost a government contract which accounted for 5% of sales over the past year. It appealed the decision, but ultimately lost.
OVerall, it seems well positioned but am unclear if growth at these levels is sustainable over the long term. I'm a little concerned about the lack of contract news since October. That being said, it has plenty of opportunity on its existing C&T max contract worth $435M of which only $112M have been ordered. Not that the initial contract was for $127M but had a ceiling of $435M. It is feasible that once the $127M is hit, no other orders are received.
Mat