Worthington Industries (WOR) Stock Forecast & Price Target

Worthington Enterprises Inc. reported a robust sales growth of 18% year-over-year, totaling $304 million, which exceeded consensus expectations by approximately 4%. The Building Products segment, which is the primary revenue driver for the company, achieved a significant increase in sales of 32% in Q1, bolstered by higher volumes and the integration of the Elgen acquisition. Additionally, the company's organic sales increased by 10%, demonstrating continued strength in key sectors such as cooling and construction products, aligning with industry shifts toward environmentally friendly solutions.

Worthington Enterprises Inc. is facing a negative outlook primarily due to declining gross margins, which fell by approximately 120 basis points year-over-year, driven by internal initiatives and increased headcount costs. The company's Building Products segment is struggling, evidenced by a significant drop in equity earnings from ClarkDietrich, posting $4 million compared to $10 million the previous year, alongside underwhelming free cash flow of $27.9 million in Q1, which decreased from $31.5 million last year. Additionally, adjusted EBITDA and adjusted EPS figures missed consensus estimates by roughly 5% and 8%, respectively, further highlighting challenges in margin management amidst a competitive market landscape and internal operational inefficiencies.