Summary Points: A private equity acquisition of both GNC and Vitamin Shoppe makes more sense than buying GNC alone. The deal will leave private equity with more upside and result in a premium that GNC/VSI investors will accept. The deterioration in GNC financials increases the difficult of getting the deal done. VSI is an alternative way to get exposure to any … [Read more...]
Watch Abercrombie As Potential Upside Is Significant
Summary Points: ANF pop was short-lived as new team still has a lot of work ahead of it. While Abercrombie brand continues to disappoint, Hollister is a bright spot. New CEO comes from Hollister so hopefully she can push the company in the right direction. Operating expenses need to be brought down further. Stock attractiveness stems from the dividend which … [Read more...]
Invest In Citigroup For Its Size And Reach
Summary Points: Capital adequacy and NIM is decent however Citigroup's returns are behind its peers. Using regression we can calculate a multiple based on banks' returns. The calculations show that there is upside when compared to both North American and global banks. Investors interested in adding exposure to the sector should consider Citigroup. Valuing banks is … [Read more...]
What a Long Strange Trip It’s Been
This year has been a year of surprises as conventional wisdom-based forecasts have proven to be like oral agreements: not worth the paper on which they are written. The coming year promises to bring more confusion and volatility as the markets are preparing for the U.S. to be a Trumpian utopia of wealth creation. I caution against blindly accepting this narrative for it will … [Read more...]
Office Depot: Value Trap Or Opportunity?
Summary Points: The stock tanked after the deal with Staples collapsed. Management has been taking steps that could positively influence the stock. Stock has found a base while its cheap price (under 3x EV/EBITDA) implies that any positive news will help it recover. Where there is fear, there is opportunity. Office Depot (NYSE:ODP) presents such a case. Value trap … [Read more...]
ArcBest: A Lack Of Reasons To Like
Summary Points ARCB trades at a discount to competitors; however, relative growth has been average and EBITDA margins are relatively lower. Majority of business is asset-intensive with high capex requirements and limited control over revenues and expenses. Investors should consider off-balance sheet items, pension obligations and make adjustments for equipment … [Read more...]
Abercrombie: Selling Below Tangible Book With A 5.5% Yield
Summary Points: The company appeared back on track as it closed Q4. Two quarters later, this is in question. Hollister brand has done most of the work while Abercrombie brand is still struggling. Industry-wide decline in same store sales. The problem is not unique to ANF. Comparable sales highly fluctuate. The stock trades below tangible book with a 5.5% dividend … [Read more...]
