2 Reasons to Like BRC (and 1 Not So Much)

Brady’s 18.4% return over the past six months has outpaced the S&P 500 by 7.2%, and its stock price has climbed to $82.00 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.

Is it too late to buy BRC? Find out in our full research report, it’s free.

Why Does Brady Spark Debate?

Founded in 1914 and evolving through more than a century of industrial innovation, Brady (NYSE:BRC) manufactures and supplies identification solutions and workplace safety products that help companies identify and protect their premises, products, and people.

Two Things to Like:

1. Long-Term Revenue Growth Shows Strong Momentum

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Brady’s sales grew at a solid 7.5% compounded annual growth rate over the last five years. Its growth beat the average business services company and shows its offerings resonate with customers.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Brady’s EPS grew at an astounding 15.7% compounded annual growth rate over the last five years, higher than its 7.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

Slow Organic Growth Suggests Waning Demand In Core Business

We can better understand Safety & Security Services companies by analyzing their organic revenue. This metric gives visibility into Brady’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Brady’s organic revenue averaged 1.6% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations.

Final Judgment

Brady has huge potential even though it has some open questions, and with its shares beating the market recently, the stock trades at 16× forward P/E (or $82.00 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More Than Brady

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