Q: Hello 5iR,
What is you opinion of AFN after this pullback, which seems quite harsh? A buy here or sell or hold. Thanks
What is you opinion of AFN after this pullback, which seems quite harsh? A buy here or sell or hold. Thanks
5i Research Answer:
It was a pretty big miss; EPS of 39c missed estimates of 67c; revenue of $314.5M missed estimates of $356.8M. EBITDA also missed (by 5%). Management notes 'pockets of cautious purchasing behaviour' and expects all of its growth to come in the second half of the year. Sales fell 9.3%. EPS growth is still expected for the year. But, with debt high (6X cash flow), declining sales and a weakening outlook, we would not be in a big rush to buy this right now. The stock is cheap, no doubt, at 8X earnings. We would see it as a HOLD, but a lot is riding here on a second half improvement, so it is one that needs to be watched very closely.