Each edition of The Deep Dive unpacks a new idea sourced from our online community of value investors. In this issue, we explore Art’s Way Manufacturing (NASDAQ: ARTW), a little-known micro-cap that combines downside protection with compelling earnings growth potential.
Art’s Way’s hard asset–backed farm equipment division is set for a margin recovery as dealer inventory levels normalize and productivity gains from automation take hold. Meanwhile, its high-return Modular Buildings segment is growing rapidly, already delivering 20% EBIT margins on minimal capital investment.
Under the leadership of newly installed owner-operator CEO Marc McConnell, whose family controls approximately 46% of the stock, the company has reduced operating expenses by 20% and invested in welding cobots, CNC machinery upgrades, and a full ERP system overhaul. These moves lay the groundwork for consolidated EBIT and EPS to meaningfully improve.
With an enterprise value around $19 million, a return to mid-cycle agricultural margins and continued growth in modular could unlock upside, while the asset-backed balance sheet and recurring cash flow from modular help cushion cyclical downside.
This communication is for informational purposes only. This is not intended to be investment advice. Seek a duly licensed professional for investment advice.
