Virco Manufacturing Corporation Common Stock (VIRC) fair value

ACCE thesis

Virco Manufacturing makes classroom and school furniture, including student desks, chairs, tables and storage, sold mainly to K-12 school districts in the US. The durable part of the story is the procurement cycle: schools buy furniture on budget calendars tied to bond referenda and federal and state funding, and Virco's gross margin of 37.5% suggests it still earns real pricing power on that catalogue despite its small size. Revenue is shrinking, though, down 5.0%, and return on equity is slightly negative at -2.2%, so the operating profitability (12.3% operating margin) is not yet reaching shareholders. The stock trades at a forward P/E of 12.8 on a market cap of about $99M, which makes the valuation a function of whether the sales decline stabilises in the next budget cycle. With a score of 39/100 and no index membership, this is a small, shrinking, cyclical name that warrants a look only if you have a view on school capital spending.