Chaikin: Buy this stock by Sept. 29

Hey there, bargain hunter. Worthington Enterprises (NYSE: WOR) posted its fiscal Q1 2027 results after the close on September 22, then held its conference call before the open on September 23. It cleared the bar on every line. The stock had already jumped roughly 10% in the prior week on expectations; it surged another 15% on September 23. Now it sits around $59. The question is whether the move has finally priced in the story, or whether the market is still sleeping on what this business is becoming.

Scoreboard

• Revenue: $343.9 million, up 13% year over year, beating the $331.3 million consensus
• Adjusted EPS: $0.82, ahead of $0.75 expected (prior year: $0.78)
• Adjusted EBITDA: $74.0 million, up 10%, topping $69.6 million estimates; margin 21.5%
• Free cash flow: $54.0 million, nearly double the prior-year quarter
• Operating cash flow: $66.7 million, up $25.7 million year over year
• Buybacks: 335,000 shares repurchased for $18.2 million
• Dividend: $0.20 per share declared, payable December 29, 2026

What the Business Actually Does

Worthington makes pressurized containment products, ceiling suspension systems, light-gauge metal framing, and specialty tools sold through two segments. Building Performance Solutions (BPS) accounts for the larger share of revenue and covers products like HVAC and cooling tanks, data center thermal management vessels, and building construction components through joint ventures WAVE and ClarkDietrich. Trade and Specialty Solutions handles handheld torches, propane cylinders, balloon kits, and drywall tools sold through mass retailers.

The sleeper inside BPS is ASME tanks, the pressure vessels Worthington engineers for liquid-cooling systems inside data centers. Management said ASME tank revenue was $13 million in Q1 and expects it to grow sequentially in each remaining quarter of fiscal 2027, weighted to the back half. CEO Joe Hayek said industry sources suggest the liquid-cooling and thermal-management market for ASME tanks could be more than 10 times the size of the legacy market in the next few years, while flagging that a pipeline is not revenue and conversions can take time.

The Numbers That Matter

• BPS revenue: $215.1 million, up 16.4% year over year; organic growth 6%, acquisitions added $19.2 million
• BPS adjusted EBITDA margin: 27.8%, down from 32.4% a year ago
• Trade and Specialty revenue: $128.8 million, up 8.3%; EBITDA margin expanded to 18.6% from 13.6% a year ago
• WAVE equity income: $35.1 million, up $2.7 million year over year
• Net debt: about $251 million (total debt $305.6 million less $55.1 million cash); 4.23 million shares remain under the repurchase authorization

Steel availability tightened during the quarter. Management said extended lead times created production and scheduling disruptions across construction and balloon product lines, and that the A2L refrigerant transition created an estimated $7 million year-over-year headwind to adjusted EBITDA as demand normalized after earlier inventory building.

Is It Cheap?

At roughly $59, WOR trades around 14x to 16x forward earnings depending on the data source and estimate set. On an EV/EBITDA basis, using Q1 fiscal 2027 net debt of about $251 million and a market cap around $2.9 billion, you get an enterprise value a little over $3.1 billion. That can look like roughly 10x on a trailing adjusted EBITDA figure in the low $300 millions, but that EBITDA figure varies by definition and period, so treat the multiple as a range rather than a single point.

GurFocus puts GF Value near $58.33 on the stock, flagging a slight overvaluation at current prices. Consensus price targets and rating mixes move around with the tape, but the basic debate is stable: the gap between WOR’s multiple and higher-multiple building-products peers leaves room, but only if ASME tank revenue actually scales as projected.

Bull / Base / Bear

Bull: ASME tank revenue doubles or triples in fiscal 2027’s second half, BPS margins recover as steel normalizes, and WAVE JV earnings hold up. On that path, $4.00 in adjusted EPS is achievable and 16x that gets you to $64.

Base: ASME tanks grow sequentially but modestly; steel headwinds ease by Q3; Trade and Specialty margins hold their new 18% floor. Adjusted EPS comes in around $3.50, and the stock settles in the $52 to $58 range.

Bear: Data center project timelines slip, steel stays tight, A2L normalization takes longer than guided. Free cash flow compresses, buybacks slow, and the premium for the data center angle deflates. Back to low $40s.

Action Plan

The 15% single-day move means you are not buying a secret. If you do not own it, a starter position in the $56 to $59 range makes sense, sizing up on any pullback toward $52. Trim if it runs past $65 without a corresponding revision to ASME revenue expectations. Watch the Q2 results for sequential ASME tank revenue confirmation.

Cheap Investor Checklist

• Does ASME tank revenue grow sequentially in Q2 fiscal 2027? (management said it expects this)
• Does BPS EBITDA margin recover above 28% as steel availability improves?
• Do WAVE and ClarkDietrich JV earnings hold near current levels?
• Is net debt trending toward $200 million or below by fiscal year end?
• Does buyback pace continue at $15 million or more per quarter?
• Does Trade and Specialty margin hold above 17% after Q2 seasonality?
• Are data center pipeline conversions accelerating into the Investor and Analyst Day on November 10, 2026?

Bottom Line

Worthington beat cleanly, free cash flow nearly doubled, and the data center ASME tank opportunity is real enough to have management talking about sequential growth through fiscal 2027. If ASME revenue scales as expected and steel headwinds ease by mid-year, the stock looks cheap relative to slower-growing building-products peers. If the pipeline stalls and steel constraints persist, you are paying a fair price for a solid but ordinary industrial. Position size accordingly.