- Companies growing at > 20% top line
- Significant growth drivers include international expansion
Commercial banking money:
Derived from Piotroski screen
- Trading at less than 50% of its 52-week high resulting from missing Q3 earnings
- International sales comprises of 40% of revenue, near its 50% target
- Correction (presumably) derives from negative sentiment associated with soft consumer discretionary products (driven by low oil prices) for Apparel, Accessories and Footwear
- Revenue growth of > 20%
- $4.5bn market cap, net debt negative
- Relatively cheap shoes (versus Under Armour, Nike)
- NTM P/E: Current of 13.5x; Average of 19x; High of 28x
- EPS expected to double from $1.50 / sh to $3.00 / sh
- Dividends / repurchases
- Sensitize EPS
- Has portfolio of over 1,400 drugs
- Mylan down 30% YoY
- Share price declined from ~$70 / sh to ~$40 / sh following rejection of takeover bid by Teva ($82 / sh)
- Acquired Meda for $7.2bn
- Multiple compression in late 2015 due to attempts to acquire Perrigo
- 2018E EPS of $6.00 / sh, (2016E $5.92 / sh)
- NTM EPS Average of 12x; Current of 10x; High 18x
- Ranked #1 for generics sales
- Mylan is a beneficiary of the patent cliff for branded drug companies
- 45% of revenue is from international markets
- High revenue and profitability growth – what does terminal state look like?
- To what degree is management distrust warranted?
- What is management’s strategy for shareholder payout?
- Return on capital over 8 years
- CFO / Total assets for 8 years
- Emily Muhleman on Seeking Alpha
Greenblatt Return on Capital (EBIT / Capital)
- Capital: Net PP&E + Net Working Capital
- or Fixed assets + current assets – current liabilities – cash
- Price / Tangible Book Value (Total Assets – Intangible Assets – Total Liabilities) < 1
Observations: energy companies & other natural resources prevalent. Micron appears too. 29 companies total
The assets of a company are typically worth more as part of a going concern than in liquidation, so liquidation value is generally a worst-case outcome. In m experience, most ‘net net’ companies have been turned around, rather than liquidated.
I value [consistency] of earnings more than the absolute cheapest business, because then we know there is some sustainability to the cheap business getting even cheaper, and eventually gravity takes over.
Developed a screen *proxy* for Graham style net net value (NWC – total debt) by utilizing NWC only.
- NWC > Market Capitalization
Observations: most companies laden with net debt (of 8 companies) based on companies ranging from 2bn – 15bn on major US exchanges.
- Piotroski score of 8 or 9
- < 75% of 52-week high
- Kate Spade – growth play from break-even PE; however bottomed in February 2015
- Skechers – missed Q3 results resulting in 50% decline; strong growth at $3.2bn revenue (~$200mm Net Income equivalent to 7% margin; EPS expected to double by 2018); international growth focus