$10.07
$28.74
bear $10.07
base $20.90
bull $28.74
margin of safety $11.00
market price* $43.81
XPEL sells automotive paint protection film and window films, plus related installation services, through several channels: independent aftermarket installers (about 51% of 2025 revenue), third-party distributors (about 16%), new car dealerships, automakers, and 34 company-owned installation centers (14 in the United States, 9 in Canada, and the rest across India, Taiwan, the United Kingdom, Germany, Australia, Mexico, Japan, Thailand and China). Its products have mostly been made by third-party contract manufacturers, and the annual report says the company will now invest in its own manufacturing and supply chain assets. It holds a perpetual license to a U.S. patent on multilayer polyurethane protective film. Main named competitor: Eastman Chemical (LLumar and SunTek brands). How we measured earnings. We start from operating cash flow, then remove swings in receivables, inventory, prepaid items and payables, subtract stock-based compensation as a real cost, and subtract only the maintenance portion of capital spending (spending that merely keeps pace with sales growth is treated as growth spending and left out). On that basis, earnings per share were about $0.49 in 2019, $0.71 in 2020, $1.11 in 2021, $1.57 in 2022, $1.98 in 2023, $1.74 in 2024 and $2.26 in 2025. We use 2021 through 2025 as the yardstick because the business was much smaller before 2021; the middle value of those five years is $1.74 per share. One judgement matters here: from 2021 to 2025 working capital absorbed about $92 million of cash, mostly inventory built to support growth, so reported operating cash flow ran well below net income over that stretch. We treat that as a one-time cost of growth and the cases below assume no further growth, so no further build. If the business had to keep tying up cash like this just to stand still, the value would be lower. Growth reconciliation. Earnings per share rose about 30% in 2025 after falling about 12% in 2024. Our base case assumes no growth in year one, below the latest actual rate, because we cannot point to a contracted or repeatable source of further growth. What we did and did not credit. Revenue grew from $259 million in 2021 to $476 million in 2025, but that came from market adoption, dealership and international expansion and share gains, none of which is secured, so none of it is credited. We credit only the earnings level the business has already demonstrated, and its persistence, which rests on a track record of profitable operation since 2019, a large installer network and a perpetual patent license. Base case, about $20.90 per share. Earnings hold at $1.74 per share for 15 years, then fade evenly to zero over the following 15 years as nothing we can name assures the business beyond that. Discounted at 6%. Bear case, about $10.07 per share. The annual report discloses that some key inputs come from a limited number of suppliers and in some cases sole-source suppliers, and that tariffs and trade policy could raise costs and hurt vehicle demand. In this case earnings fall to $1.05 per share, roughly the level of 2021, for 10 years and then fade to zero over the next 10, as competition from Eastman or lower-cost Asian producers erodes pricing. Bull case, about $28.74 per share. Earnings stay at 2025's $2.26 per share, a level the business has actually reached, for 20 years, then fade to zero over 10. We do not add growth beyond it. Recent results. In the first half of 2026, revenue was $260 million versus $229 million a year earlier (about 14% higher) and operating cash flow was $38.2 million versus $31.1 million. Capital spending was $74.8 million in the first half of 2026 versus $1.9 million a year earlier. We could not tie that step-up to a specific project from the filings reviewed; it is consistent with the stated plan to invest in manufacturing. It does not change our earnings level, but it is not counted as creating value either. What could make this wrong. If the 2025 earnings jump proves lasting and growth continues, the shares are worth more than the base case. If the sole-source supply, tariffs or a large new capital program hurt margins and cash flow, they are worth less. The margin-of-safety price is set close to the bear case because the business depends on a limited group of suppliers and tariff-exposed products, and because the company is moving into capital-intensive manufacturing.