Twin Disc Climbs 70% in 6 Months: Should You Buy the Stock?

Twin Disc, Incorporated TWIN shares have surged 70.4% in the past six months, significantly outpacing the industry’s 11.6% growth. The company has outperformed other industry players, including Flowserve Corporation FLS and Nordson Corporation NDSN, which posted increases of 15.7% and 9.2%, respectively, in the same time frame. TWIN benefits from surging defense spending, hybrid/electric system leadership, strategic acquisitions, operational efficiencies and strong free cash flow and balance sheet.Image Source: Zacks Investment ResearchA Key Look Into TWIN’s Business OperationsTwin Disc, Incorporated, established in 1918, designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment. It operates manufacturing facilities in North America and Europe, with distribution centers in the Asia-Pacific. Its product portfolio includes marine transmissions, azimuth and surface drives, propellers, power-shift transmissions, torque converters, industrial clutches, control systems and braking systems. These products serve marine, energy, government and industrial markets and are sold through a global network of direct sales and distributors. The company focuses on innovation, engineering excellence, competitive performance and customer service to maintain its market position.Twin Disc’s Key TailwindsOne of the strongest tailwinds for Twin Disc comes from rising global defense spending. With specialized products like marine transmissions, gearboxes, and propulsion systems already in use by major defense end-users, the company is well-positioned to capture its growing $50–75 million defense pipeline. Defense now accounts for around 15% of the backlog, and a 45% YoY rise in its contribution reflects increasing long-term visibility and stable order flows.The company’s leadership in hybrid and electrification solutions across marine, industrial, and land-based systems also needs mention. Twin Disc is capitalizing on the global push toward sustainability by offering fully electric and hybrid solutions that reduce emissions, fuel consumption and noise pollution. With hybrid powertrains offering five to 10 times more content than traditional systems, Twin Disc has a clear pathway to increase wallet share in both existing and emerging markets.Strategic acquisitions have broadened Twin Disc’s product suite and geographic footprint. The purchase of Veth and Kobelt added marine propulsion and control solutions, while the Katsa Oy acquisition expanded its presence in industrial gearboxes and electrification. These acquisitions not only diversify revenues away from cyclical oil and gas markets but also create synergies in manufacturing, R&D and distribution. With an established framework for bolt-on and transformational M&A, the company continues to leverage acquisitions as a platform for growth while strengthening its IP-protected portfolio.Finally, Twin Disc benefits from operational initiatives and a strong balance sheet that support long-term expansion. Global footprint optimization, including recent facility sales and supply chain efficiencies, enhances margins and responsiveness. The company maintains solid cash generation, targeting free cash flow conversion above 60%, and has reduced leverage from 5.5x in FY21 to just 0.8x in FY25. Its 2030 goals of $500 million in revenues, 30% gross margin, and disciplined capital allocation further underscore its ability to self-fund growth. This financial resilience positions Twin Disc to capitalize fully on macro and industry trends.Challenges Persist for TWIN’s BusinessTwin Disc generates nearly 60% of its revenues from cyclical marine and oil & gas sectors, making it vulnerable to economic and energy market swings, particularly in Europe, where Veth is heavily exposed. The company’s push into hybrid systems faces hurdles like high costs, fragmented supply chains, and customer hesitation, especially in price-sensitive markets. Additionally, global operations expose it to currency and geopolitical risks, while narrow defense penetration limits its ability to offset downturns in core commercial markets.Twin Disc’s ValuationThe company is cheaply priced compared with the industry average. Currently, TWIN is trading at 0.58X trailing 12-month EV/sales value, below the industry’s average of 3.64X. The metric also remains lower than the company’s peers, including Flowserve (1.76X) and Nordson (5.1X), suggesting an opportunity for potential investors.Image Source: Zacks Investment ResearchConclusionTwin Disc is strategically transforming its business through defense expansion, electrification, and smart acquisitions. Despite exposure to cyclical markets, currency volatility and geopolitical risks due to its global footprint, Twin Disc is strategically transforming its business through defense expansion, electrification and smart acquisitions. The company’s operational discipline and robust balance sheet provide a solid foundation to weather near-term volatility. Strong fundamentals coupled with TWIN’s undervaluation present a lucrative opportunity for investors to add the stock to their portfolio. 7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Flowserve Corporation (FLS): Free Stock Analysis Report Nordson Corporation (NDSN): Free Stock Analysis Report Twin Disc, Incorporated (TWIN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks