Simpson Manufacturing: The Housing Recovery Play That's Buying Back Shares

"The bull case starts with the business itself. Simpson makes the unglamorous connectors and fasteners that hold buildings together, structural products with sticky relationships to contractors and builders. When housing construction picks up, Simpson's revenue follows. The company posted $623.5 million in Q3 2025 revenue, up 6.2% year-over-year, with operating margins holding at a robust 20.4%. Polymarket prediction markets show 58% probability that U.S. median home values will exceed $418,000 by February 2026, up from current levels."

"Here's where it gets interesting: Simpson generated $338 million in operating cash flow in 2024 and spent $180 million on capital expenditures, leaving $158 million in free cash flow. The $100 million buyback was fully funded from operations, no debt required. In fact, the company reduced debt by $261 million in 2024 while simultaneously returning $146.5 million to shareholders through buybacks and dividends. That's financial discipline, not desperation."

"But the bear case has teeth. Annual earnings per share peaked at $8.80 in 2023 and have fallen for two consecutive years, landing at $6.66 in 2025. That's a 24% decline from peak. The company is buying back shares while earnings contract, which raises the obvious question: Are they buying at inflated valuations? The valuation math matters here. Simpson trades at 22.87 times trailing earnings, a slight discount to peer Illinois Tool"

Simpson Manufacturing shares rose 16.5% to $187.78, near a 52-week high, after a strong start to 2026. The company manufactures structural connectors and fasteners and reported $623.5 million in Q3 2025 revenue, up 6.2% year-over-year, with operating margins at 20.4%. Simpson generated $338 million in operating cash flow in 2024, spent $180 million on capital expenditures, and produced $158 million in free cash flow. The company funded a $100 million buyback from operations, reduced debt by $261 million, and returned $146.5 million to shareholders. EPS fell from $8.80 in 2023 to $6.66 in 2025, and the stock trades at 22.87 times trailing earnings.

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