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Indiana-based Drew Industries is a supplier to the recreational vehicle and manufactured homes industries. Through its subsidiaries, Lippert Components, Inc. and Kinro, Inc., it produces a range of components, including windows, doors, chassis, chassis parts, bath and shower units, axles, upholstered furniture, awnings and slide-out mechanisms for RVs. It also makes components for modular housing, truck caps and buses, and for trailers used to haul boats, livestock, equipment, and cargo. It has a $1.2-billion (U.S.) market cap.
Drew has grown earnings at a 25-per-cent pace over the long term (using an average of the 3- and 5-year EPS growth rates), which the Peter Lynch-based model likes. It has grown sales at an 18-per-cent pace over long-term, (using an average of the 3-, 4-, and 5-year sales growth rates). Drew gets strong interest from the Lynch model, in part because of its 0.97 PE-to-growth ratio.
The company, which has no long-term debt, gets strong interest from the James O'Shaughnessy-based growth model, thanks to its combination of good momentum (78 relative strength over past 12 months) and reasonable 1.2 price/sales ratio. It gets some interest from the Martin Zweig-based growth model, which likes that growth is not only high but accelerating -- EPS grew at a 130-per-cent rate last quarter, up from 25 per cent over the long term.
Drew has a solid 17-per-cent return on equity, nearly doubling the industry average (9 per cent) and it has a strong 31.6-per-cent return on capital, using the EBIT/total capital employed metric the Joel Greenblatt-based model uses.
John Reese is long DW.
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