Blount International Is Attractive As Pullback Overdiscounts Fading Negative Catalysts
- Blount International is down almost 25% YTD due to the lowered 2013 guidance and the discovery of an accounting problem.
- However, the discount to the peer group remains even after management provided a bullish outlook for 2014 while the accounting problem is in the process of being remediated.
- As a result, the stock trades at an attractive valuation that implies little to no value for its dominant market position, strong recurring cash flow or multiple growth opportunities.
- The significant increase in free cash flow driven by improved working capital management and operating efficiencies should provide funding for continued deleveraging and the initiation of a dividend/buyback.