Invesment Idea #30

"Leaders in all walks of life acknowledge that wearing quality timepieces starts conversations, makes strangers friends and distinguishes each as a person of taste and judgement." - Bob Hope

This company might be a giveaway with the sub-title above especially to the followers of this substack. In order to mask it a little, we are not revealing the currency below. This is a European activist stock and the company has to turn things around for share price to rally.

Financials (Dec 26)

• Net Sales: 8bn, OP: 0.8bn, Net Income: 0.4bn

• EBITDA: 0.8bn, Free Cashflow (FCF): 0.4bn

• Dividend: 4.5, Dividend Yield: 3.2%

• Net Cash*: c.5bn, Market Cap: c.7bn

*Net Cash: Cash + 50% of Inventory - Short-term debt - Long-term debt

Financial Ratios

• ROE: 7% (currently 3%), ROA: 5% (currently 1%)

• GPM: 80%, OPM: 5-10% (currently 3%)

• EV/EBITDA: 11.5x, EV/FCF: 14.4

• PER: 18.1x, PBR: 0.7x

• FCF Yield: 5.5%

As mentioned, an activist recently launched a campaign against this stock and tried to get onto the board of directors but was rebuffed. Since then, interested market participants and fellow substackers wrote a lot about this name and we have no shortage of deep research.