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Mayville Engineering Company (MEC)
NYSE:MEC
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Mayville Engineering Company
(NYSE:MEC)
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Rating:63Neutral
Price Target:
$20.00
▲(7.18% Upside)
MEC's overall score reflects stable financial health and growth potential from strategic acquisitions. However, operational challenges, high valuation, and legacy market weaknesses weigh on the score. The reaffirmation of guidance and potential in new markets are positive, but increased debt and cash flow issues are concerns.
Positive Factors
Balance Sheet Strength
A very low debt-to-equity ratio (0.11 TTM) materially reduces financial leverage and increases balance sheet flexibility. This durable strength supports capital allocation for integration, working capital needs, and buffering cyclical downturns without immediate refinancing pressure.
Accu-Fab Acquisition Upside
Integration of Accu-Fab opens higher-margin data center and critical power end markets, with $20–30M of projected 2026 synergies and a sizable qualified pipeline. Structurally shifts revenue mix toward more profitable segments, supporting sustainable margin expansion.
Stable Contract Revenue Base
A revenue model anchored in long-term contracts and established OEM partnerships creates predictable demand and customer stickiness. Durable contractual exposure to defense, transportation, and industrial sectors reduces revenue volatility across cycles.
Negative Factors
Free Cash Flow Decline
A meaningful decline in free cash flow constrains internal funding for acquisitions, capex, and debt reduction. Even with decent operating cash conversion, falling FCF limits the company's ability to deleverage or invest organically, raising medium-term liquidity risk.
Higher Leverage Post-Acquisition
A jump in net debt and a 3.5x leverage ratio increases interest costs and financial rigidity. Elevated leverage narrows strategic options, raises refinancing and covenant risk, and means future cash generation must be prioritized to meet the company's deleveraging target.
Legacy Market Weakness
Sustained softness in legacy end markets (commercial vehicles, agriculture) and declining organic sales erode manufacturing margins and operating leverage. If persistent, these structural headwinds could delay margin recovery and make new-market gains necessary to restore profitability.
Mayville Engineering Company (MEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$379.14M
Dividend YieldN/A
Average Volume (3M)209.75K
Price to Earnings (P/E)32.5
Beta (1Y)0.66
Revenue Growth-12.38%
EPS Growth-0.71%
CountryUS
Employees2,200
SectorIndustrials
Sector Strength72
IndustryManufacturing - Metal Fabrication
Share Statistics
EPS (TTM)0.10
Shares Outstanding20,318,370
10 Day Avg. Volume208,508
30 Day Avg. Volume209,749
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)1.29
Price to Sales (P/S)0.56
P/FCF Ratio4.17
Enterprise Value/Market Cap1.40
Enterprise Value/Revenue0.99
Enterprise Value/Gross Profit10.08
Enterprise Value/Ebitda8.23
Forecast
1Y Price Target
$21.00Price Target Upside12.54% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Mayville Engineering Company Business Overview & Revenue Model
Company DescriptionMayville Engineering Company, Inc., together with its subsidiaries, operates as a contract manufacturer that serves the heavy and medium duty commercial vehicle, construction and access equipment, powersports, agriculture, military, and other end markets in the United States. The company provides a range of prototyping and tooling, production fabrication, coating, assembly, and aftermarket components. It also supplies engineered components to original equipment manufacturers. The company was founded in 1945 and is headquartered in Mayville, Wisconsin.
How the Company Makes MoneyMEC generates revenue primarily through its contract manufacturing services, which include the production of custom metal components and assemblies for various industries. The company's revenue model is based on long-term contracts with clients in sectors such as transportation, military, and industrial, providing a stable income stream. Key revenue streams include direct sales from manufactured products, services related to engineering and design, and assembly services. Additionally, MEC has established significant partnerships with large corporations in the defense and transportation industries, which contribute to its earnings by providing consistent demand for its manufacturing capabilities. The company's focus on quality and precision, along with its ability to adapt to customer needs, further enhances its market position and revenue potential.
Mayville Engineering Company Earnings Call Summary
Earnings Call Date:Nov 04, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 03, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted significant progress with the Accu-Fab acquisition and strong growth potential in the data center and critical power market. However, challenges persist in legacy markets, particularly in commercial vehicles and agriculture, contributing to a decline in manufacturing margins and increased debt leverage. Despite these challenges, the company remains optimistic about future growth and reaffirmed its 2025 guidance.Q3-2025 Updates
Positive Updates
Accu-Fab Acquisition Integration
Significant progress in integrating the Accu-Fab acquisition, with the sales team engaging with Accu-Fab's customer base. The integration offers a scalable solution for data center and critical power OEMs, leading to a substantial pipeline of over $100 million in opportunities.
Data Center and Critical Power Market Growth
The data center and critical power market is expected to represent 20% to 25% of total revenues in the coming years. Revenue synergy expectations from Accu-Fab have increased to between $20 million and $30 million in 2026, with gross margins approximately 10 percentage points higher than the historical average of 15% to 20%.
Construction & Access Market Growth
Construction & Access market revenues increased 10.1% year-over-year during the quarter, supported by the Accu-Fab acquisition and strong nonresidential activity. Organic net sales growth in this market was 6.2% in the quarter.
Powersports Market Growth
Net sales in the powersports market grew 6.4% year-over-year, driven by transient aluminum-related demand.
New Project Awards
During the third quarter, MEC secured $30 million in new project awards with data center and critical power customers. Year-to-date, total awards across legacy markets reached $90 million, nearing the full-year target of $100 million.
Total Sales and Guidance Reaffirmation
Total sales for the third quarter increased 6.6% year-over-year to $144.3 million. MEC reaffirmed its 2025 financial guidance with expected net sales between $528 million and $562 million.
Negative Updates
Legacy End Markets Softness
Legacy end markets remain in a cyclical trough with commercial vehicle demand softening, resulting in a 24% decline in net sales to this end market compared to the prior year period.
Agriculture Market Decline
Agriculture net sales declined 21.8% amid elevated interest rates and lower farm income.
Manufacturing Margin Decline
The manufacturing margin rate decreased to 11% for the third quarter of 2025 compared to 12.6% in the prior year period, primarily due to nonrecurring restructuring costs and lower customer demand in legacy markets.
Interest Expense Increase
Interest expense was $3.4 million for the third quarter of 2025, up from $2.7 million in the prior year period, driven by higher borrowings from the Accu-Fab acquisition.
Free Cash Flow Impact
Free cash flow during the third quarter of 2025 was a negative $1.1 million, reflecting $3.5 million of nonrecurring costs, compared to a positive $15.1 million in the prior year period.
Increased Net Debt
Net debt increased to $214.9 million, up from $114.1 million at the end of the third quarter of 2024, resulting in a net leverage ratio of 3.5x.
Company Guidance
During the Mayville Engineering Company (MEC) Third Quarter 2025 Earnings Conference Call, the company reaffirmed its full-year 2025 financial guidance despite challenges in legacy end markets. MEC expects net sales between $528 million and $562 million, adjusted EBITDA of $49 million to $55 million, and free cash flow of $25 million to $31 million. The integration of Accu-Fab has significantly expanded MEC's market opportunities, with $100 million in qualified opportunities in the data center and critical power sectors. Revenue synergy expectations from Accu-Fab are projected to be between $20 million and $30 million in 2026, with gross margins approximately 10 percentage points above the historical average of 15%-20%. Meanwhile, the commercial vehicle market saw a 24% decline in net sales year-over-year, while the Construction & Access market experienced a 10.1% increase. MEC's third-quarter sales increased by 6.6% to $144.3 million, although organic net sales fell by 9.1%. The company aims to use positive free cash flow in the fourth quarter to reduce debt, with a target to achieve a net leverage ratio of 3x or lower by the end of 2026.Mayville Engineering Company Financial Statement Overview
Summary
MEC shows stable financial health with a strong balance sheet, evidenced by a low debt-to-equity ratio. However, the decline in free cash flow and lower profit margins highlight operational challenges. The company needs to improve cash generation and profitability.Income Statement
The company shows a modest gross profit margin of 9.5% TTM, indicating some efficiency in production. However, the net profit margin is relatively low at 2.3% TTM, suggesting limited profitability. Revenue growth is positive at 1.7% TTM, but lower than previous years, indicating a slowdown. EBIT and EBITDA margins have decreased compared to the previous year, reflecting potential operational challenges.65
Positive
Balance Sheet
The debt-to-equity ratio has improved significantly to 0.11 TTM, indicating reduced leverage and a stronger equity position. Return on equity is moderate at 7.2% TTM, showing decent profitability relative to shareholder equity. The equity ratio is stable, suggesting a balanced asset structure.72
Positive
Cash Flow
Free cash flow has declined by 23.6% TTM, raising concerns about cash generation. The operating cash flow to net income ratio is healthy at 0.81, indicating good cash conversion. However, the free cash flow to net income ratio is slightly lower at 0.83, suggesting some pressure on free cash flow.58
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 533.52M | 581.60M | 588.42M | 539.39M | 454.83M | 357.61M |
| Gross Profit | 52.55M | 71.10M | 69.70M | 61.07M | 51.38M | 31.50M |
| EBITDA | 64.43M | 82.14M | 55.05M | 55.09M | 24.39M | 25.59M |
| Net Income | 12.22M | 25.97M | 7.84M | 18.73M | -7.45M | -7.09M |
Balance Sheet | ||||||
| Total Assets | 585.58M | 445.57M | 496.66M | 440.58M | 379.47M | 338.53M |
| Cash, Cash Equivalents and Short-Term Investments | 1.22M | 206.00K | 672.00K | 127.00K | 118.00K | 121.00K |
| Total Debt | 250.15M | 110.05M | 181.16M | 108.98M | 67.61M | 47.94M |
| Total Liabilities | 340.81M | 193.82M | 266.68M | 222.71M | 181.20M | 137.68M |
| Stockholders Equity | 244.77M | 251.75M | 229.98M | 217.87M | 198.27M | 200.86M |
Cash Flow | ||||||
| Free Cash Flow | 52.37M | 77.71M | 23.77M | -6.18M | -24.85M | 28.73M |
| Operating Cash Flow | 63.14M | 89.81M | 40.36M | 52.43M | 14.46M | 36.52M |
| Investing Cash Flow | -150.54M | -11.71M | -104.13M | -50.67M | -33.96M | -5.77M |
| Financing Cash Flow | 88.44M | -78.56M | 64.31M | -1.75M | 19.50M | -30.63M |
Mayville Engineering Company Technical Analysis
Positive
18.66
Price Trends
17.54
Positive
16.06
Positive
15.41
Positive
Market Momentum
0.36
Positive
53.28
Neutral
63.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MEC, the sentiment is Positive. The current price of 18.66 is above the 20-day moving average (MA) of 18.65, above the 50-day MA of 17.54, and above the 200-day MA of 15.41, indicating a bullish trend. The MACD of 0.36 indicates Positive momentum. The RSI at 53.28 is Neutral, neither overbought nor oversold. The STOCH value of 63.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MEC.
Mayville Engineering Company Risk Analysis
Mayville Engineering Company disclosed 35 risk factors in its most recent earnings report. Mayville Engineering Company reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mayville Engineering Company Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $664.12M | 18.79 | 9.78% | ― | 7.61% | 25.35% | |
67 Neutral | $191.98M | 21.91 | 9.95% | ― | 0.26% | -48.11% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $379.14M | 32.48 | 5.06% | ― | -12.38% | -0.71% | |
54 Neutral | $289.76M | 25.18 | 1.26% | ― | -3.42% | ― | |
47 Neutral | $50.16M | -96.72 | -5.10% | ― | 1.15% | 94.58% | |
46 Neutral | $115.86M | -21.73 | -8.73% | ― | 0.20% | 88.39% |
* Industrials Sector Average
MEC
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18.66
2.44
15.04%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.