Key Points
Shares of Worthington Enterprises (NYSE: WOR) rose on Wednesday after the industrial manufacturer highlighted its attractive artificial intelligence (AI)-driven growth prospects.
Acquisitions are accelerating Worthington’s expansion
Worthington’s net sales climbed 13% year over year to $344 million in its fiscal 2027 first quarter, which ended on Aug. 31.
Recent acquisitions drove six percentage points of that growth, while organic sales gains accounted for the rest. Worthington completed its purchase of LSI Group, a leading supplier of metal roof components, in January.
AI infrastructure is a lucrative opportunity
Worthington is seeing particularly strong growth in its data center-related sales. The company’s ASME tanks, which are designed to meet strict standards set by the American Society of Mechanical Engineers, are increasingly being used in liquid cooling systems inside AI data centers.
Worthington believes the market for these tanks could grow more than 10x in the coming years, driven by soaring demand for AI infrastructure.
Worthington’s free cash flow is surging
All told, Worthington’s adjusted net earnings grew 3% to $40 million. Its adjusted earnings per share, boosted by stock buybacks, rose 5% to $0.82. That bested Wall Street’s estimates, which had called for per-share profits of $0.75.
Better still, Worthington’s free cash flow nearly doubled to $54 million. Management indicated that this cash would enable it to acquire more businesses, while also rewarding investors with dividends and share repurchases.
“With growing free cash flow generation and a healthy balance sheet, we have the flexibility to invest in and pursue additional growth opportunities that fit our strategy,” CEO Joe Hayek said.
Should you buy stock in Worthington Enterprises right now?
Before you buy stock in Worthington Enterprises, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Worthington Enterprises wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $389,154!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,406,303!*
Now, it’s worth noting Stock Advisor’s total average return is 949% — a market-crushing outperformance compared to 214% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
