RE:SPB - Analyst reportsRoxy27 wrote: I would appreciate analyst commentary specifc to the acquisition. Based on the questions (and answers) on the call I expect the commentary to be quite positive. Plus the equity raise and corresponding debt reduction is positive.
Based on my back of knapkin calcs the AOCF and payout ratio is neutral after equity raise and not including any cost reductions from synergies (AOCF of $1.31/share).
With cost reductions the AOCF increaases ~15%.
SPB trades at a 8.7x EV multiple to ltm EBITDA at current share price. It was 9x prior to announcement.
With synergies its at 7.75x.
Using a forward multiple of 8.5x implies 15% upside to current SPB trading price and 35% to CUS (implied) trading price.
Using a forward multiple of 9x (because let's blue sky it) implies 25% upside to current SPB trading price and 49% to CUS (implied) trading price.
I bought CUS at $1.405 because;
- It was a 20% discount to SPB trading price
- I think this is a done deal - don't think competition will be a major hurdle
- I like SPB/mgm't and think they can get this done with synergies
- consolidation is good for pricing power
Good luck
After the bought deal closes at the end of this month, I would expect TD to come out with a glowing report. They cant comment on it until the bought deal closes because they were involved in it.