Carlisle Companies Incorporated (CSL, Financial)
Carlisle is the largest manufacturer of commercial roofing materials in the U.S. Over the past few years, the company has been divesting cyclical and low-return businesses and narrowing its focus to construction materials. Labor shortages, supply chain delays and raw material cost inflation have allowed all industry participants, including Carlisle, to increase prices on their products. As these headwinds normalize, investors fear that most of the price increases will reverse. However, we believe that Carlisle will retain the price increases due to its stellar reputation, cost and technology leadership and the beneficial structural characteristics of the industry. Carlisle should continue generating attractive returns against the backdrop of persistent demand for reroofing. At 12x our estimate of next year’s EPS, we think Carlisle is trading well below intrinsic value.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund second-quarter 2023 commentary.
