2. Company Overview
• Micro Cap – 133 Million
• Headquarters in Dallas, TX
• Industry: Security and Protection Services
• Two segments
– Security Products
– Marine Components
3. Company Manufacturing
• Security Products
– mechanical and electrical cabinet locks and other
locking mechanisms used in recreational
transportation, postal, office, etc. applications.
• Marine Components
– stainless steel exhaust systems, gauges, throttle
controls and trim tabs
5. Industry Life Cycle Position
• Security and Protection Services industry
• Mature Phase
• Stable and sees a growing demand for security
products where people are worried about the
security of their personal information
6. Industry Reaction to Business Cycle
• Security and Protection Services industry is a
non-cyclical industry
• Their Marine Services Products are affected by
seasonal changes like weather and summer
time
• Will expose the Marine Components segment
to cyclical changes
8. Government
• New legislation regarding climate change and
the environment could pose a threat to the
marine product services segment.
• It could increase the cost of production and
may affect future sales through the possible
price increase
– while trying to appease legislation and follow the
laws.
9. Foreign
• A threat that is posed on CompX is the
manufacturing of similar products in foreign
countries across Asia
– due to cheaper labor and materials
– which allows foreign competitors to undercut
CompX International’s prices.
11. Overview
• Security and Protection Products
– Many different kinds of locking systems
• Marine Components
– Different parts for boats and other marine
equipment
• Generating a CAGR of 6.43%
12. Corporate Strategy
• Diversifying the products they offer since 2006
– Expand their customer base
• Emphasis on new product development and
sales to additional markets
– increased their potential for future sales and has
helped diversify their risk
13. Life Cycle
• CompX International is nearing maturity
• Their diversified product line still provides
some growth potential
• A foreign country such as China could make
and sell their products cheaper than CompX
International
• Still see the company seeing the same returns
in past years even if this happened
15. Products and Market Lines
• CompX International’s main product line is
their mechanical and electrical cabinet locks
and other locking mechanisms
– accounted for roughly 87.7% of their revenues in
their most recent fiscal year
– traditional locks which include KeSet®, System
64®, TuBar®, and Turbine™
– e-locks which include CompX eLock®, and also
StealthLock®
16. Product and Market Lines
• CompX International’s secondary product line
is their recreational marine components
– This product line accounted for roughly 13.3% of
their revenues in their most recent fiscal year
– CompX is an Original Equipment Manufacturer
(OEM) which makes the parts that are used in a
different company’s end product
– CompX’s productions of these parts are branded
under various names
17. Market for Company’s Products
• The markets for CompX’s products include
locksmith distributors, and OEM customers.
18. Marketing Strategy and Customer Support
• CompX has a marketing strategy of their
engineers and sales people partnering with
representatives within the respective
companies they do business with.
• CompX also relies heavily on their dealer
network and how they present their products
to their customers.
19. Significant Customers
• CompX’s customer base is diverse and the loss
of any single customer would not affect the
company in a detrimental way
20. Suppliers and Raw Materials
• many of the products CompX produce use
zinc, brass, and steel components
– This opens them up to the risks of the
commodities markets
• CompX material costs accounted for 48% of
their cost of sales in 2015.
22. Competitive Environment
• Their security products have to compete with
foreign and domestic competitors as well as
the competition involving the price of the raw
materials
• Their marine components compete with small
domestic manufacturers and limited
competition with foreign competitors
23. Comparative Analysis of Competition
• CompX’s outstanding patents range from less
than 1 year to 17 years as of December 2015
• This shows the company’s longevity of
protection and innovation of their products
25. Revenue Growth
• CompX International has been growing their
revenues by a CAGR of 6.43% over the last 5
years
• This performance is attributable to CompX
International’s different revenue generators being
diversified and not depending on one another
• Having their security products segment not being
a cyclical product, and having only the marine
components segment acting cyclical is helpful
26. Margin Analysis
• CompX International has maintained their
margins over time and has showed stable
operating margins and gross profit margins
since 2012
• CompX International also had a large increase
in their profit margin for 2012 and then the
profit margin returned back to more of an
expected profit margin
29. Price to Earnings Multiples
• trades a little more than 14 times its earnings, versus
an industry average of 30.3 and the SP500 average of
23.99.
• The Price to Earnings Growth (PEG) multiple, looks to
agree when it comes to the Industry, but not the SP500
in this case. It is currently 3.05 for CompX versus the
industry at 5.12 and the overall market at 1.96.
• Investors can invest in CompX and it will provide them
with a lower Price to Earnings instead of a higher P/E of
another stock in the Security Services Sector.
30. Revenue Multiples
• CompX International trades at 1.21 times sales,
versus an industry average of 1.75.
• A consistent measure of value versus sales would
be the EV/EBITDA multiple
• CompX EV/EBITDA multiple is 4.54.
• The Industry has a EV/EBITDA multiple of 13.15
– much higher than CompX’s EV/EBITDA which shows
that CompX might be undervalued.
– This could be explained by CompX having no debt
outstanding which would lower the EV/EBITDA
multiple.
31. Recommendation
• Involved management
• Strong Financials
• No debt since 2012
• Book Value of CompX is $9.48, but currently
trading around $10.70. PBV = 1.12
• PBV of the industry = 3.28
• Overall Recommendation is to Buy
