UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: TMFMattyA Big red star, 1000 posts Old School Fool Supernova Odyssey 1
Mission Team Member CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17  
Subject: Re: HINKY catalyst? Debt concerns? Date: 1/6/2012 10:09 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Hi tj,

Great questions. I think there are two things that need to happen for there to be a real catalyst for the stock: (1) The Euro fears have to subside to a larger degree and (2) Heineken needs to pay down about 25% more of its debt. If both those things happen, I see Heineken eventually being valued more in-line with its industry peers: 2x sales, 15x free cash flow. That alone would send the stock 50% higher.

The FEMSA acquisition (and the S&N acquisition eventually) will help Heineken sustain growth in the low-single digits. That may not sound exciting, but with the moves management is making to streamline costs, that could easily translate into 10%+ operating profit growth -- especially if energy and commodity costs stay flat or come down a bit.

So put together modest profit growth with a higher multiple to FCF, and I'm confident Heineken can be a solid market-beater from here.

As for your other question, I'm not too worried about Heineken's debt situation (just the size). They do have a big slug of debt ($2.0bn+) coming due in 2013, but the rest will come due from 2014-2018. And rates on most of Heineken's debt is in the 5 - 6% range -- more than manageable.

Thanks for checking out our Streetfighter portfolio. More picks to come!

Matt A.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Mylan Transitioning from Generics
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement