Gannett (GCI) reported after the bell yesterday, beating on revenue but missing earnings expectations by 21%. The company posted an $84M loss on $635M in income but reiterated guidance to 10% growth in its digital division, keeping overall revenue declines to the low to mid-single digits. CEO Michael Reed reiterated the focus on digital transformation, with revenues from that side of the business likely to comprise 50% of Gannett’s income by 2025.
Dril-Quip (DRQ) reported 1Q 2024 results on Wednesday, posting revenue of $110M (+21% YoY) versus a net loss of $20M (+10% YoY). Although revenue was down sequentially on the quarter, that was primarily due to lower Subsea Product connector and surface equipment sales and a delayed Subsea Service project in Europe. The company has suspended guidance updates pending its merger with Innovex, so we will have to wait a bit for clarity regarding future projections.
Adient (ADNT) reported a challenging quarter, with numbers down across the board both sequentially and on an annual basis. Revenue fell 4% to $3.75B while earnings slipped into negative territory, showing a loss of $0.77/share versus estimates of +$0.42/share. Unsurprisingly following their recent announcement of layoffs, the company provided an update to its FY24 outlook, recognizing slow ramp of launches, adverse customer mix and softer electric vehicle production in the Americas and EMEA.
Janus Henderson Group (JHG) reported yesterday, coming in line with expectations on revenue but surpassing earnings expectations by nearly 35%. CEO Roger Thompson noted, “The improvement was driven primarily by the U.S. concentrated growth, international alpha and Global Alpha strategies. In the multi-asset capability, the balanced strategy, which is the vast majority of assets in this bucket moved back above its benchmark on a one-year basis and is now ahead of its benchmark across all time periods.”
Frontier Group Holdings (ULCC) beat expectations by reporting a 2% increase in revenue year-on-year, but underwhelmed on earnings, posting a net loss of $24M. Overall cost and revenue performance were still better than expected, however, with CEO Barry Biffle noting, “We expect results in the balance of the year to build on the revenue and network enhancements we’re implementing, most notably the transition to underserved, high-fare markets, revenue diversification and cost savings, including benefits related to network simplification.”
Newell Brands (NWL) posted revenue in line with estimates, but crushed earnings expectations by 81%. The company posted revenue of $1.65B – down about 8% year-on-year – but showed a net loss of only $9M, more than 90% improved on an annual basis. CEO Chris Peterson said that the company “operationalized the new operating model and continue to execute our strategy, which focuses on disproportionately investing in innovation, brand building and go-to-market excellence in our largest and most profitable brands and markets while driving further standardization and scale efficiencies across the supply chain and back-office functions.”
Baxter International (BAX) beat on both the top and bottom lines as it reported revenue of $3.6B (+2%) and EPS of $0.65 (+9%). According to CEO Joe Almeida, “Performance was fueled by top line results, combined with our intense focus on driving improved supply chain execution across our manufacturing network. Overall, performance is clearly benefiting from the streamlining and strategic clarity afforded by our newly implemented operating model, as we leverage the advantages of improved visibility globally, increased accountability and function of verticalization.”
Friday, May 3, 2024, Subscribers-Only Podcast:
Covering recent news and analysis for our portfolio companies and other topics relevant to value/contrarian investors.
Today’s podcast is about 7 minutes long and covers:
- Initial note
- Introduction – a quick look at the seven CTL companies that reported this week.
- Comments on recommended companies
- Kopin (KOPN) further expanded its customer base by receiving a third production order for its Organic Light Emitting Diode (OLED) microdisplays, for use in thermal imaging vision systems - both mounted and handheld for Indian Armed Forces.
- Brookfield Reinsurance (BNRE) announced the completion of its acquisition of American Equity Investment Life (AEL) in a cash and stock transaction valued at $56.50 per AEL share. AEL’s fixed annuity business boosts BNRE’s expanding insurance operations and increases its assets under management to over $100 billion.
- Six Flags (SIX) announced that the Company and its wholly owned subsidiary, Six Flags Theme Parks Inc., as co-issuers, closed their private offering of $850 million aggregate principal amount of 6.625% Senior Secured Notes due 2032.
- VF Corporation (VFC) announced plans to release its fourth-quarter fiscal 2024 financial results on Wednesday, May 22, 2024, at approximately 4:05 p.m.
Please know that while I don’t yet personally own shares of all Cabot Turnaround Letter recommended stocks – including the stocks mentioned in this note – that will materially change over time.
Portfolio
| Market Cap | Recommendation | Symbol | Rec. Issue | Price at Rec. | Current Price * | Current Yield | Rating and Price Target |
| Small cap | Gannett Company | GCI | Aug 2017 | 9.22 | $ 3.12 | - | Buy (9) |
| Small cap | Duluth Holdings | DLTH | Feb 2020 | 8.68 | $ 4.21 | - | Buy (20) |
| Small cap | Dril-Quip | DRQ | May 2021 | 28.28 | $ 18.88 | - | Buy (44) |
| Small cap | Kopin Corp | KOPN | Aug 2023 | 2.03 | $ 0.79 | - | Buy (5) |
| Small cap | Ammo, Inc. | POWW | Oct 2023 | 1.99 | $ 2.53 | - | Buy (3.50) |
| Mid cap | Mattel | MAT | May 2015 | 28.43 | $ 18.56 | - | Buy (38) |
| Mid cap | Adient plc | ADNT | Oct 2018 | 39.77 | $ 27.47 | - | Buy (55) |
| Mid cap | Xerox Holdings | XRX | Dec 2020 | 21.91 | $ 13.46 | 7.4% | Buy (33) |
| Mid cap | Viatris | VTRS | Feb 2021 | 17.43 | $ 11.73 | 4.1% | Buy (26) |
| Mid cap | TreeHouse Foods | THS | Oct 2021 | 39.43 | $ 37.68 | - | Buy (60) |
| Mid cap | The Western Union Co. | WU | Dec 2021 | 16.40 | $ 13.40 | 7.0% | Buy (25) |
| Mid cap | Brookfield Re | BNRE | Jan 2022 | 61.32 | $ 42.44 | 0.8% | Buy (93) |
| Mid cap | Polaris | PII | Feb 2022 | 105.78 | $ 84.31 | 3.1% | Buy (160) |
| Mid cap | Goodyear Tire & Rubber | GT | Mar 2022 | 16.01 | $ 12.24 | - | Buy (24.50) |
| Mid cap | Janus Henderson Group | JHG | Jun 2022 | 27.17 | $ 32.58 | 4.8% | Buy (67) |
| Mid cap | Six Flags Entertainment | SIX | Dec 2022 | 22.60 | $ 24.21 | - | Buy (35) |
| Mid cap | Kohl’s Corporation | KSS | Mar 2023 | 32.43 | $ 24.35 | 8.2% | Buy (50) |
| Mid cap | Frontier Group Holdings | ULCC | Apr 2023 | 9.49 | $ 5.91 | - | Buy (15) |
| Mid cap | Advance Auto Parts | AAP | Sep 2023 | 64.08 | $ 76.92 | 1.3% | Buy (98) |
| Mid cap | Mohawk Industries | MHK | Jan 2024 | 103.11 | $ 116.76 | - | Buy (165) |
| Mid cap | VF Corporation | VFC | Mar 2024 | 16.24 | $ 12.58 | 2.9% | Buy (25) |
| Mid cap | Barnes Group | B | Apr 2024 | 36.55 | $ 36.57 | - | Buy (55) |
| Mid cap | First Quantum Minerals | FM | Apr 2024 | 15.93 | $ 18.28 | - | Buy (40) |
| Large cap | General Electric | GE | Jul 2007 | 304.96 | $ 164.46 | 0.2% | Buy (160) |
| Large cap | Nokia Corporation | NOK | Mar 2015 | 8.02 | $ 3.70 | 3.2% | Buy (12) |
| Large cap | Macy’s | M | Jul 2016 | 33.61 | $ 19.42 | 3.6% | Buy (25) |
| Large cap | Newell Brands | NWL | Jun 2018 | 24.78 | $ 7.68 | 3.6% | Buy (39) |
| Large cap | Vodafone Group plc | VOD | Dec 2018 | 21.24 | $ 8.62 | 11.8% | Buy (32) |
| Large cap | Berkshire Hathaway | BRK.B | Apr 2020 | 183.18 | $ 403.40 | - | HOLD |
| Large cap | Wells Fargo & Company | WFC | Jun 2020 | 27.22 | $ 60.23 | 2.3% | Buy (64) |
| Large cap | Western Digital Corporation | WDC | Oct 2020 | 38.47 | $ 70.74 | - | Buy (78) |
| Large cap | Elanco Animal Health | ELAN | Apr 2021 | 27.85 | $ 13.47 | - | Buy (44) |
| Large cap | Walgreens Boots Alliance | WBA | Aug 2021 | 46.53 | $ 17.82 | 5.6% | Buy (70) |
| Large cap | Volkswagen AG | VWAGY | Aug 2022 | 19.76 | $ 14.30 | 6.4% | Buy (70) |
| Large cap | Warner Bros Discovery | WBD | Sep 2022 | 13.13 | $ 8.05 | - | Buy (20) |
| Large cap | Capital One Financial | COF | Nov 2022 | 96.25 | $ 142.46 | 1.7% | Buy (150) |
| Large cap | Bayer AG | BAYRY | Feb 2023 | 15.41 | $ 7.59 | 7.1% | Buy (24) |
| Large cap | Tyson Foods | TSN | Jun 2023 | 52.01 | $ 61.40 | 3.2% | Buy (78) |
| Large cap | Agnico Eagle Mines | AEM | Nov 2023 | 49.80 | $ 65.02 | 2.5% | Buy (75) |
| Large cap | Fidelity Natl Info Services | FIS | Dec 2023 | 55.50 | $ 70.45 | 2.0% | Buy (85) |
| Large cap | Baxter International | BAX | Feb 2024 | 38.79 | $ 37.31 | 3.1% | Buy (60) |
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