TGLS

Tecnoglass is a genuinely high-quality industrial: 42.8% gross margin, 23.5% operating margin and a 22.4% ROE are exceptional for a flat-glass fabricator, and the MD&A explains why — a vertically integrated, low-cost 6.1M-sq-ft Barranquilla complex feeding a strong Florida/U.S. franchise (ranked a top-four U.S. fabricator, #1 on Forbes' 2024 small-cap list). Revenue has compounded cleanly from $497M (FY21) to $984M (FY25, +10.5%), helped by the April 2025 Continental Glass acquisition that added backlog and Southeast U.S. reach. At $46.21 the stock trades at 13.5x trailing EPS and 2.1x sales — an undemanding multiple for a business earning 22% on equity and still growing double digits, which is the core of the buy case.

The caveat is that earnings have gone sideways while revenue climbed. Net income peaked at $183M in FY23 and has drifted to $161M then $160M, so net margin compressed from ~22% to 16.2% over two years. The pressure is visible in the cost structure: D&A jumped 38.9% and long-term debt rose 58.2% to $171M (partly funding Continental), while operating cash flow fell 20.4% to $136M against capex up 27.3% to $101M — leaving only ~$35M of free cash flow and cash down 25% to $101M. Dividends paid rose 42.5% to $28.1M and the share count shrank 4.8%, so capital returns are real but are now running close to internally generated free cash.