Skip to main content
Report this ad

Mean reversion candidate: Shiloh Industries (SHLO)


SHLO is up 59.62% for 2010 vs. the S&P 500 Index, down 7.57%

Mean reversion candidate: Shiloh Industries (SHLO)

Company Overview

Shiloh Industries (SHLO) is a manufacturer of first operation blanks, engineered welded blanks, complex stampings and modular assemblies for the automotive, heavy truck and other industrial markets.


Shareholder Equity: Shiloh has 16.5 million shares outstanding, of which 5.2 million are floating shares (available for the public to purchase). Institutions own 22.94% of the stock.

Financial Strength: Shiloh has a debt to equity ratio of 0.35. Compared to its competitors, the company has been fairly aggressive in using debt to finance growth.

Valuation: SHLO was not profitable for the previous 12 months, so a price/earnings ratio does not apply. Based on its price/cash flow ratio of 3.57, the shares are inexpensive compared to the miscellaneous fabricated products industry average of about 10.

Profitability: Shiloh’s gross profit margin is only 4.54%, less than 91% of other companies in the industry.

Management Effectiveness: With a return on equity of -2.77%, Shiloh has been able to reinvest less efficiently than 72% of its competitors.

Growth Rate: The company’s growth rate is better than 83% of the companies in its industry.

Analyst Ratings: Thomson Reuters has an “outperform” rating on the stock. Standard and Poor’s rates the shares as a “hold.”


The shares of SHLO have performed very well in 2010, especially since early Arpil. As of Wednesday’s close the stock is up 59.62% while the broad market as measured by the S&P 500 index is down 7.57%.

Short-Term Reversion to the Mean

U.S. Airways closed at $8.46 a share on Wednesday after reaching a high of 10.39 on June 15. SHLO is oversold within of a bullish trend and therefore, a candidate for a reversion to the mean rally. A trader might buy on Thursday at 8.46 or better with a stop loss of 0.72 below the entry price. The target price is 9.90 (based on a 8.46 entry price).

For more information visit Grail Investing at

Note: and all services provided on its web site are for educational purposes only. Nothing contained within its Web site should be interpreted as a recommendation to purchase, sell or hold any security at any time. Always consult with an investment advisor familiar with your financial goals before making any investment or trading decisions.



Report this ad