Welcome to the latest issue of the PRO Weekly Digest in which we publish highlights from our PRO coverage. Comment below or email us at pro-editors at seekingalpha.com to let us know what you think. Find past editions here. PRO subscribers can access interviews by following the SA Interviews account and view past interviews under the same account.
Click here to read the interview with Benjamin Rowles.
PRO idea playing out
Autohome (NYSE:ATHM) is up ~150% since Matus Kubala, CFA, shared his bullish thesis in February 2017, that it traded at an attractive valuation and enjoyed a high-quality business model, large network effects, high ROIC and a long growth runway. In an update comment, Matus noted revenues are still growing strongly, the online marketplace was scrapped (which increased margins and ROIC), a dividend was announced and margins should gradually climb to levels comparable with British Autotrader Group.
PRO Weekly Digest idea playing out
Call from the archive - BDN
Brandywine Realty Trust (NYSE:BDN) is up ~5% since Dane Bowler shared his bullish thesis in September 2017. However, following reiterated key assumptions for 2017 guidance including core occupancy of 93-94%, 7-8% increase in same-store cash NOI and 12.5% dividend hike, and with the original price target representing an additional ~25% upside, this may be worth another look.
Idea screen of the week
Each week we use the PRO Idea Filter to find potential ideas based on a recent news event. This week, PRO Editor John Leonard, CFA, looks at companies positioned to benefit from deleveraging.
As one of the simplest ways to create value is to “transfer” it from debt to equity holders, I ran a screen of PRO Long Ideas with Deleveraging as the Investment Opportunity tag.
Three ideas turned up on this screen that might be of interest (prices as of January 25 close):
Townsquare Media (NYSE:TSQ) by Aurum Capital LLC: Published on January 12, 2018, ~unchanged since publication, author's price target offers ~100% upside. TSQ is an under the radar media company trading at a distressed multiple. However, the lower leverage target is achievable as TSQ is highly cash-generative while catalysts include a divestiture or turnaround of the live events business and more shareholder-friendly capital allocation.
Lee Enterprises (NYSE:LEE) by Gino Aalbrecht: Published on January 4, 2018, up ~15% since publication, author's price target offers an additional ~75% upside. LEE trades at the lowest EBITDA multiple in the industry yet has the highest EBITDA margin, future revenue declines are overstated, strong cash flow is being used to delever and it will soon be in a position to refinance.
Xerium Technologies (NYSE:XRM) by Casey McKinney: Published on December 22, 2017, up ~5% since publication, author's price target offers an additional ~70% upside. The business has stabilized and is positioned for growth while a plant rationalization improved cash generation, which will be used to delever; XRM’s peers trade at enterprise value multiples 100% higher despite similar EBITDA margins.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Check with individual articles or authors mentioned for their positions.