United States Lime & Minerals: Great Company, But No Margin Of Safety
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Luis Rios5 FollowersFollow5ShareSavePlay(16min)CommentsSummaryUnited States Lime & Minerals (USLM) boasts strong fundamentals, resilient margins, no debt, and a robust cash-rich balance sheet, but current valuation is excessive.USLM's geographic advantage and diversified customer base have enabled stable performance despite industry cyclicality and intense competition.At $119/share and a ~27x P/E, USLM is priced for highly optimistic long-term growth, with little margin of safety for value-oriented investors.Valuation analyses (NAV, EPV, Franchise Value) indicate the market is overestimating USLM's sustainable growth, warranting caution for long-term buyers. Mariia Vitkovska/iStock via Getty Images Investment Thesis United States Lime & Minerals, Inc. (USLM) is a lime- and limestone-producing company. For the last 5 years, it has shown improvements in revenue growth. Revenues rose at a CAGR of 14.6% from 2020 to 2024. CostThis article was written byLuis Rios5 FollowersFollowWorked in the finance and operational departments in the construction industry for 5 years. With a desire to become an equity research analyst and start my investing journey, I decided to leave the construction industry and go back to my roots in finance. Became a sector-focused analyst specializing in real estate, infrastructure, and materials — combining direct industry experience with formal training in value investing. My goal is to bring a different valuation approach, based on economic realities, and not flawed and meaningless assumptions, that are needed under more popular valuation methods, in order to help investors gauge true intrinsic value. I differ from most industry analysts by first assessing the economic viability of the businesses, and after determining the kind of business we are dealing with, I apply a proper valuation method, based on the reproduction or liquidation cost of the assets, the earnings power value, and if the business possess a solid competitive advantage, an estimation of the return that can be earned by buying a growth stock at any given market price. By incorporating my different approach to valuing stocks with my experience in construction, I plan to conduct and publish research on public equities across diverse industries.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. This valuation analysis follows Bruce Greenwald's valuation methodology.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You