https://www.alphaspread.com/security/par/dbg/dcf-valuation/bear-case
I'm looking at this french recycling company, its trading below book value, yes it has relatively high debt but it has consistently grown top line revenue and earnings.
Steel production worldwide is going down but that I think is a temporary phenomenon but long term this seems like a crazy drop in value for this company as recycling steel I think has a long term positive outlook, what am I missing here?
The question here is can it service its debt as revenue and free cashflow go down, survive whatever this downturn is and then out the other side it should have good secular tail winds. If yes then this seems like a steal.
I think because of the fall in cash flow that is expected and the fact that they will probably run down their cash its one to watch for it to fall cheaper. They have good coverage of their interest expense but still debt can kill a company so I'd rather get an even bigger margin of safety on it but still a very interesting one given the growth its had and will likely have.
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