What You Need to Consider With Haynes International, Inc. (HAYN)

From there, the company has managed to maintain a profit margin of 5%, against Both ATI and TKA’s <1%, and has shown margins nearing 10% in the past, while competitors tend to remain below 4%. Given that the company’s margins have then also declined less than those of its competitors, an investor can see how it is that Haynes’ business is demonstrating a more robust profitability than its competitors, which leads us to the outcome of our discussion.

In combining our understanding of how it is that Haynes International, Inc. (NASDAQ:HAYN)’s revenues are growing at a rate that is faster than its competitors, and maintaining a level of profitability that is both stronger than competitors, and declining at a slower rate than that of its competitors, it seems as though Haynes actually presents a comparative purchasing opportunity based on its apparent ability to generate returns for investors during a cyclical upswing. That being said, investors have currently priced the stock as being worth $45.88, which an investor can use to solve for an expected discount rate of 8% through the Dividend Discount Model.

As such, investors looking to establish a position in Haynes should consider the macroeconomic environment, and evaluate the company’s ability to exceed this rate of growth. Such a situation would occur during a cyclical upswing, during which the price of the company’s final product should increase, and the size of its top-line should increase at a rate that demonstrates the company’s ability to scale at a greater pace than its competitors.

Ajay Goel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Ajay is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article What You Need to Consider With Haynes International originally appeared on Fool.com and is written by Ajay Goel.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.