Northwest Pipe Co. (NWPX)

November 15, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Smart Sand Inc. (SND):

Terravest Industries Inc. (TVK.TO):

LGL Group, Inc. (LGL):

G-III Apparel Group, Ltd. (GIII):

Hummingbird Resources Plc. (HUMRF):

Micropac Industries, Inc. (MPAD):

Barrett Business Services, Inc. (BBSI):

Delta Apparel, Inc. (DLA):

AdvanSix, Inc. (ASIX):

Universal Technical Institute (UTI):

Burnham Holdings Inc (BURCA):

Select Interior Concepts (SIC):

Manitowoc (MTW):

Ciner Resources LP (CINR):

Global Ship Lease (GSL):

Alico, Inc. (ALCO):

Genco Shipping (GNK):


Tidewater (TDW):

TravelCenters of America (TA):

Teekay Tankers (TNK):

Ranger Energy Services (RNGR):

Macro Enterprises (Canada: MCR.V):

This week, we are going to look at Northwest Pipe Company (NWPX).  Northwest Pipe Co. is the nation’s leading manufacturer of engineered water pipeline and infrastructure.

Northwest Pipe has a market cap of $273 million, with $30.4 million in cash and $46.5 million in debt.  The stock price is $27.82.


Step One

First we screen for cheapness based on five metrics.  Here are the numbers for Northwest Pipe:

    • EV/EBITDA = 6.67
    • P/E = 10.56
    • P/B = 1.03
    • P/CF = 4.20
    • P/S = 0.95

Step Two

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company.  For more on the Piostroski F-Score, see my blog post here:

Northwest Pipe has a Piotroski F-Score of 6.  (The best score possible is 9, while the worst score is 0.)  This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA).  Northwest Pipe has TL/TA of 28.1%, which is quite good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders.  At Northwest Pipe, management owns about 3% of the shares, worth over $8 million.  This is good.

Shareholder yield is the dividend yield plus the buyback yield.  At Northwest Pipe, both the dividend yield and the buyback yield are zero.  So the shareholder yield is zero.

Each component of the ranking has a different weight.  The overall combined ranking of Northwest Pipe places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

The final step is to study the company’s financial statements, presentations, and quarterly conference calls to (i) check for non-recurring items, hidden liabilities, and bad accounting; (ii) estimate intrinsic value—how much the business is worth—using scenarios for low, mid, and high cases.

See Northwest Pipe’s investor presentation from August 2020: file:///C:/Users/jb/Downloads/NWPX%20Investor%20Presentation%20(August%202020)_vFINAL.PDF

Also, check out the following write-up:

(To access the link to, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

    • Low case: Book value per share is $26.89.  This is 3.3% lower than today’s $27.82.
    • Mid case: Normalized earnings are approximately $3.30 per share.  With a P/E of 12, the stock would be worth $39.60, over 40% higher than today’s $27.82.
    • High case: Normalized earnings could reach $4.00 per share.  With a P/E of 15, the stock would be worth $60, about 115% higher than today’s $27.82.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


If you are interested in finding out more, please e-mail me or leave a comment.

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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.