Simpson Manufacturing Co., Inc. (SSD), a maker of connectors and fasteners for wood, concrete, and steel connections, slowed its depreciation schedule to lift earnings in the past year.

The company slashed depreciation expense by switching from accelerated to a straight-line method for its machinery and equipment assets.

The change inflated Simpson’s Net Income $5.1 million or 1.5%.

With an Enterprise Value (EV) of approximately $8.4 billion, Simpson is priced as if it will grow annual sales to more than $7.2 billion, up from an estimated $2.3 billion in 2026. To justify its current share price of $193.57 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Simpson must:

—Grow sales 12% annually for the next decade, versus the company’s estimated 2026 sales growth of 2.8% and three-year average of 3.3%
—Increase NOPAT margin to 17%, versus our 2025 estimate of 13.68% and three-year average estimate of 14.37%
—Increase Invested Capital (IC) Turns to 1.1, up from our 2025 and three-year average estimates of 0.9 and 0.96, respectively

Notably, the current share price also implies Simpson increases Return on Invested Capital (ROIC) to 18.7% from our 2025 and three-year estimates of 12.54% and 11.75%, respectively: