Category Archives for "Valuation"

The cone of uncertainty

Yes, its ‘cone of uncertainty’ time again for hurricane watchers as Dorian ends up over 350 miles from where it was projected to be 5 days ago. Given that the 5 day margin of error on these forecasts appears to only around plus-or-minus 125 miles, this must temper President Trump’s relief that the current forecasts […]

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M&A mantra: When in a hole, keep digging!

M&A in the Marketing Services sector is a bit like archeology; if you find yourself in a hole, keep digging! This is how companies such as Publicis, can propose to invest a further $4bn on another digital marketing acquisition, notwithstanding presiding over an eroding organic top line and sub market ROIC, notwithstanding splashing out over […]

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Chevron offer for Anadarko – when cheap money meets rising oil prices

A return to ‘cheap money’ by the Fed and stabilising oil prices and it is perhaps not surprising to see a return to acquisition led growth strategies. For Chevron, its $50bn agreed offer for Anadarko looks to be broadly OpFCF neutral after $1bn of projected OpEx cost synergies from combining these two predominantly North American […]

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Thomas Cook Group – analysis, or time for catastrophe modelling?

The recent gyrations in the Thomas Cook share price (a +50% surge yesterday and -13% correction today), might have you reaching for your catastrophe models, but its volatility after its latest guidance cut ought not to be that surprising. Combine a volatile top line with low margins, substantial financial leverage and a low rate of […]

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Pearson – resorting to one-off non-cash tax items to try and spice up a tired recovery story

Pearson was for a while the darling of the sector, with a recovering top line supported by substantial cost reductions and an fx tailwind from the appreciation in its principal trading currency, the US dollar. Beyond this however, there was only limited evidence that the ship is being turned about, in terms of what really […]

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PPG – rising costs exposes weak pricing power. An increasingly common story

Tax reductions, tariff walls and a trillion dollar plus increase in Federal debt to fund the party and one might have thought that bond markets would be fretting about inflation. Perhaps surprisingly and despite the absence of Fed price distortions as a buyer of its own junk, the inflation rate implied from the TIPS-fixed Treasury […]

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