Janus International Group, Inc. (NYSE: JBI) is a prominent supplier in the self-storage industry, contributing 63% to its 2022 sales.
The company excels in offering a range of products, including facility and door automation, access control technologies, and various types of doors.
Additionally, Janus has a significant presence in the commercial sector, accounting for 37% of its sales, where it provides doors for industrial facilities, offices, and retail spaces, making it a notable player in its field.
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Core Business Segments
Janus International’s operations are spread across three primary sales channels:
New Construction Self-Storage: This segment caters to entities involved in constructing new facilities or expanding existing ones, with a significant focus on institutional investors like REITs, which hold a 30% share in the self-storage market.
R3 Self-Storage: This segment is dedicated to the restoration, rebuilding, and replacement of products reaching the end of their lifecycle. With an estimated 60% of self-storage facilities being over 20 years old, this segment is crucial for modernization and repairs.
Commercial Sector: Janus also serves the commercial sector, providing products and services to a variety of businesses, including offices, shops, and e-commerce companies.
Geographically, the US is Janus’s largest market, contributing 93% to its total sales, with the rest of the world, including Europe and Australia, making up the remaining 7%.
Investment Thesis
Janus International is poised for sustained organic growth across all its business segments. Factors such as population growth, increased personal spending, and the downsizing of living spaces are expected to drive demand in the new construction channel.
The aging infrastructure of existing self-storage facilities presents significant opportunities for the R3 segment. Additionally, the commercial sector is likely to benefit from the robust US economy and the burgeoning e-commerce industry.
International expansion, particularly in Europe, where the self-storage market is expected to grow at a 5.95% CAGR from 2024 to 2029, presents further growth opportunities for Janus International.
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M&A Strategy
Mergers and acquisitions have been a key growth driver for Janus International, and this trend is expected to continue.
However, with interest rates at elevated levels and the net debt/EBITDA ratio close to the company’s optimal range, future acquisitions are likely to be smaller, focusing on niche products rather than transformative deals.
Market Valuation
Following a significant rally in the stock price over the last year, Janus International appears to be fairly valued at its current levels.
A DCF valuation model estimates a target price of $14.2, slightly below the recent closing price of $15.1.
The company’s growth prospects seem to be already reflected in its stock price, and only substantial growth exceeding current estimates or significant M&A activity could drive further price appreciation.
Q4 ’23 and FY ’23 Outlook
The upcoming Q4 ’23 and full-year 2023 results, set to be announced on February 28, are expected to confirm Janus International’s solid growth trajectory.
Analysts anticipate a 6.6% increase in total revenues for 2023, reaching $1,086 billion, with EBITDA expected to grow by 25.8% to $285.5 million.
Conclusion
Janus International presents an attractive long-term growth story within the self-storage and commercial sectors. However, the stock appears to be fairly valued at the current levels, reflecting the company’s growth potential.
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I’m Jackson Hartwell, a writer who specializes in dissecting current business events. I’m dedicated to providing you with clear and concise insights into the world of politics, making it easier to understand the latest news and developments.
