$117.36
$245.48
bear $117.36
base $194.89
bull $245.48
margin of safety $110.00
market price* $352.91
What the business is: Preformed Line Products, incorporated in Ohio in 1947 and headquartered in Mayfield Village, Ohio, makes the hardware that holds power and communication lines together and up: helical formed-wire products (the company believes it is the world's largest maker of them), connectors and pole-line hardware for electric utilities, fiber-optic closures for telecom and broadband networks (it counts itself one of four leading suppliers), and solar framing products. It has sales and manufacturing operations in 20 countries. In 2025 sales were $669.3 million: $312.6 million in the U.S., $133.1 million in Europe, the Middle East and Africa, $114.8 million in Asia-Pacific and $108.8 million in the rest of the Americas. Its Asia-Pacific operations include subsidiaries in Beijing and Tianjin, China. Demand follows utility and telecom spending on maintenance, storm repair, grid hardening and network build-outs. That spending is steady over time but customers' ordering is not: in 2024 U.S. sales fell 23% as customers worked down inventories they had built up, and total sales fell 11%. How we measured its earning power: We started from operating cash flow and took out the temporary swings in inventory, receivables and payables, which are large for this company (inventory alone absorbed $37 million of cash in 2022, and receivables released $17 million in 2023). Write-downs of inventory and bad debts still count as costs. We also charged share-based pay, and we deducted only the capital spending needed to keep the business at its current size. The extra spending tied to sales growth (about 4.8% of new sales, the 2016-2025 average) is left out of that figure. A one-time, non-cash $11.7 million pension termination expense in 2025 and a $6.5 million goodwill write-down in 2022 were added back. On this basis owner earnings per share were $0.83, $3.66, $5.20, $1.53 and $3.51 for 2016-2020 and $8.53, $6.74, $8.55, $8.78 and $6.05 for 2021-2025. The business grew from $337 million of sales in 2016 to between $594 million and $670 million in each year since 2022. The 2016-2020 years describe a smaller company, so we anchor on 2021-2025. That window covers a full ordering cycle: the 2022-2023 surge, the 2024 destocking and the 2025 recovery. Before interest (which ran only $1.4-3.8 million a year), the median of that window is $44.0 million of cash a year, about $8.96 per share on roughly 4.91 million diluted shares. Recent results: In 2025 this cash figure fell about 31%, to $31.3 million. The causes were heavy capital spending ($40.1 million, including new plant capacity), about $15.1 million of tariff costs, largely on imported raw materials such as steel and aluminum, and a $9.0 million inventory-accounting charge tied to those tariffs. Since then, order backlog ended 2025 at $232.8 million, up 22%. Sales in the first half of 2026 were $389.0 million, up 22%, and second-quarter operating income was $27.9 million against $17.1 million a year earlier. The first quarter of 2026 was softer, though, with net income of $10.5 million against $11.5 million. Because only one strong quarter is in hand, we have not raised the base level. The backlog and the first-half sales growth, which are already contracted or delivered, justify a year-one figure of $48.4 million, 10% above the anchor and well above 2025's depressed result. Base case ($194.89 per share): Year one at $48.4 million. After that, cash flow grows 3% a year for ten years, and each year we subtract the inventory, receivables and equipment needed to support the larger sales (about 30 cents per extra dollar of sales). The 3% is below the 6.6% a year the company actually grew sales from 2015 to 2025. That record came through two downturns, by building local plants and making small acquisitions paid for in cash ($18.9 million in 2019, $16.2 million in 2022, $12.1 million in 2023, $4.7 million in 2025 including JAP Telecom in Brazil, and $9.1 million in the first half of 2026). We did not credit acquisitions beyond that pace. We also gave no credit to the hoped-for long-term boom in grid and data-center spending. After year ten we assume no growth, only that the year-ten level continues. The company has operated for nearly 80 years, and the networks its products are installed on need continuous maintenance. On those terms the business is worth about $943 million. Bear case ($117.36 per share): The 2026 backlog delivers in year one ($44.0 million). Then a 2024-style destocking cuts sales 15% and cash flow to $28 million for two years, partly cushioned by released working capital. After that, tariff costs and competition push margins permanently back to their 2016-2020 level of about 4.6% of sales, roughly $33 million a year on about $710 million of sales, with no growth ever. The business would then be worth about $562 million. Bull case ($245.48 per share): The current run-rate holds, and year one reaches $55 million. Growth then continues at 5% a year for ten years, still below the demonstrated 6.6% sales growth, with all of the extra working capital and equipment paid for. The level then holds flat. The business would be worth about $1.19 billion. Debt: Lenders are a small part of the picture. At June 30, 2026 the company had $76.2 million of cash and $42.8 million of borrowings. We hold back $20 million as working cash and credit about $0.8 million for a corporate-aircraft loan fixed at 2.744% until about 2031. That leaves roughly $14 million of net cash, which is added in every case: business value plus $14 million equals equity of about $957 million in the base case, $576 million in the bear case and $1.21 billion in the bull case. The main debts are a $60 million PNC credit line expiring June 30, 2028 ($8 million drawn at year-end 2025) and a Polish bank loan of up to PLN 100.3 million ($27.9 million) for a new plant in Poland, repayable through January 31, 2035. Annual interest is under $2 million against tens of millions of cash flow, so refinancing does not threaten any case. Margin-of-safety price: $110. From that price, the base case implies about a 21% yearly return if the shares reach base value in three years, including the $0.84 annual dividend. The bear value of $117 sits just above it, so the bear case implies roughly break-even or a small gain. Change since our last analysis: Our earlier estimate was $37.80 / $99.10 / $198.40, with a $58 margin-of-safety price. That estimate deducted all capital spending, left the large inventory swings in the earnings figure, and discounted at 8.5-12% plus a perpetual growth rate. We now use a single 6% rate for every case. We value the cash the business earns before interest, smoothed for inventory timing and net of only the spending needed to sustain it. We charge future growth for the working capital it needs, assume no growth after year ten, and include the strong first half of 2026. The higher anchor and the lower rate raise the value. Charging growth for working capital and dropping perpetual growth lower it. What would make this wrong: Tariffs on steel and aluminum could stay high or rise. Refunds of some tariffs after the February 2026 Supreme Court ruling are possible but are not counted. The bigger risks are a longer customer destocking than 2024's, or capital spending that stays near $40 million a year without matching sales growth. On the other side, if the 2026 run-rate holds for several more quarters, the base level would move toward the bull case.