Patrick Industries Inc is scored 41 for moat and 67 for management. The management score rests on a return on invested capital of 7.5% and a gross margin of 23.1% — figures that describe a business earning a respectable return on what it employs. Debt sits at 1.39x equity. The moderate moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 9.7% a year, below the 10.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 19.4x. That produces an intrinsic value of $50.97, a 10-CAP price of $43.47 and a payback time price of $53.95, with the value zone set at the highest of the three, $53.95. Today's price of $66.56 sits 23% above it.
The price is above the value zone and the business scores 41 for moat and 67 for management. Neither test argues for paying up here.
| Price | $66.56 |
| Market cap | $2.2B |
| P/E ratio | 15.8x |
| Return on invested capital | 7.5% |
| Gross margin | 23.1% |
| Debt to equity | 1.39x |
| Free cash flow yield | 6.9% |
| Growth rate used | 9.7% |
| Growth rate measured | 10.0% |
| Exit multiple assumed | 19.4x |
| Company | Moat | Buy price |
| Millerknoll Inc (MLKN) | 34 | $34.01 |
| Mohawk Industries Inc (MHK) | 34 | $155.98 |
| Somnigroup International Inc (SGI) | 69 | $62.06 |
| Sharkninja Inc (SN) | 89 | $95.20 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Patrick Industries Inc rather than accepting ours.