Added TGLS stock to portfolio. TGLS stock analysis, predictions, analyst targets

Have been going through past screeners to see which stocks I put down as maybe and found TGLS stock (Tecnoglass) that piqued my interest due to continuous past growth that is likely to continue into the future.


TGLS stock price has been growing nicely over the past few months and has yet to reach pre-COVID levels.


Analysts are predicting EPS for TGLS stock will grow in the next few years.

EPS for the year ending Dec 30, 2021: $0.95

2022: $1.017

Source: https://simplywall.st/stocks/us/materials/nasdaq-tgls/tecnoglass


Here is why analysts think the company will increase its EPS in 2021. In November 2020 during investors' presentation, Tecnoglass announced that it was able to restructure its debt significantly reducing the weighted interest on it. Tecnoglass has been historically relying on debt adding more debt every year as its assets grew, maintaining a Debt-To-Assets ratio of about 40 to 50% which is a good financial sourcing strategy.

However, it did amass quite some debt in $ terms with increasing interest payments every year. Starting April 2021 it will be on the reduced interest rate which will give the company $11 million more in earnings per year.

Source: page 12 here http://investors.tecnoglass.com/static-files/1c6d3bb1-67a0-46c2-b303-bd9a011cccb2



However, as investors, we don't want to buy companies that just cut costs but invest them wisely to grow business. Reading through the investor presentation and looking back at the past performance we can see the following:


1. Tecnoglass has been growing revenues well over the past few years.

2. Tecnoglass revenue did decline this year during COVID but in the most recent quarter sales recovered to levels almost matching pre-COVID.


3. Tecnoglass continuously strives for growth through expanding geographic footprint, a mix of new end clients, and strengthening of market position in the residential segment.


On the negative side, Tecnoglass has been showing very uneven performance in terms of profit. Despite growing revenue, its earnings keep staying low. It also often feels growth in revenue and earnings are not related. Sometimes revenue is up, earnings are down, and vice versa. This is something you should keep in mind if you plan to buy TGLS.


Analyst ratings for TGLS stock (Tecnoglass)


There are 5 analysts covering TGLS stock. All of them have a BUY rating for TGLS. The average target price for TGLS stock is $8.20. The highest target price is $10 and the lowest is $7.

Source: https://www.marketwatch.com/investing/stock/tgls/analystestimates?mod=mw_quote_tab


TGLS stock price predictions


TGLS stock is currently trading at a PE (Price-to-Earnings ratio) of 19. This was the usual PE with some deviations for the past few years, so we can safely assume the same PE will maintain into the future unless Tecnoglass's growth significantly slows down.


Taking into consideration the EPS for Tecnoglass is estimated to go up to $1 we should expect the price for TGLS stock to reach $20. However, if you want to go on a safer side you may target a PE of 15 which will provide a target price of $15.



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