Research Library
Below is our research library, listed in reverse chronological order. Please use the search box to look for research on a specific company or topic, or use the Calendar, Archives, or Sector links at left to browse for research from a specific time period or sector. If you are a Wolfe Trahan client and can not access any of the links in our library, please contact ITSupport@WolfeResearch.com to request our PDF decryption plug-in.
SAVE: Oaktree stock sale a clear positive for SAVE
Oaktree Capital, the private equity owner of 9.4M shares of SAVE (13% of the shares out) is selling its entire stake after registering the shares last night in an S-3. Oaktree, which originally invested $125M in Spirit in Feb-04, holds one of SAVE’s ten board seats and appointed a second one. It remains to be seen what happens to Oaktree’s board seats at SAVE but generally speaking we believe a private equity presence on an airline’s board is a positive as airline compensation and governance policies continue to evolve to better directly align with investor priorities. We believe Oaktree’s two board seats can be vacated without being backfilled, but we do not expect a shift in SAVE’s return-driven strategy. Also note that Indigo Partners, the other private equity owner of SAVE (~16% position) is keeping its stake intact.
MTOR F3Q Earnings
MTOR reported $92M of adj EBITDA, below our $103M and Cons $104M, mainly due to lower Aftermarket & Trailer equity income from Brazil JVs and EU sales. MTOR’s adj EPS of $0.38 was in line with our $0.37 est and Cons $0.38, but pretax missed by $0.09/shr, offset by $0.07/shr lower taxes and $0.03/shr lower noncontrolling interest.
CNW 2Q Earnings: CNW Misses High Expectations
CNW reported 2Q EPS of $0.66 vs. Cons. $0.68 and our $0.70 estimate. Despite missing our 2Q expectation by $0.04 we are leaving our full-year C12 EPS unchanged at $2.20, or about 6% below prior Cons. We expect 3Q Cons. to move down towards our est. with 1 fewer operating day in the qtr. and muted tonnage levels. We expect the stock to open under pressure initially after missing 2Q Cons. While 3Q expectations seem a bit high, underlying trends appear solid and CNW seems positioned for continued margin improvement and EPS growth if LTL pricing momentum continues despite muted tonnage.
ABFS 2Q Earnings: Signs of Improvement But Lowering Rating to Peer Perform
While we expect ABFS to remain profitable the remainder of the year, we are modestly reducing our C12 EPS estimate due to a higher expected tax rate and likely continued near-term margin headwinds from weak tonnage levels and structural cost increases. Our Outperform thesis on ABFS was based on its compelling valuation well below book value and our sense of potential labor catalysts next year from its Teamsters renegotiation. While labor catalysts remains, valuation doesn’t appear as compelling based on reduced tangible book value. ABFS also continues to struggle with the right mix of yields vs. tonnage in a slow economy.
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