IVF Hartmann AG (SWX:VBSN)

Intro
IVF Hartmann has been one of the leading Swiss companies in the field of medical consumer goods for 150 years with its headquarters in Switzerland. Since 1993, IVF has been part of the international Hartmann Group based in Germany, who also owns 66.3% of IVF Hartmann. The remaining 33.7% are free float and due to the tiny market cap, the shares are quite illiquid (yes, that’s a warning for all those who don’t like illiquid stocks).
 

Especially due to its disinfection segment, the company had a very successful 2020; that being said, in 2021 the demand for its products has decreased, be this for their disinfection products or goods related to hospitals.

Valuation
For the last five years, IVF has shown a very consistent EPS in the range of CHF 5.07 and 7.43 (2020). Thus, a normalized EPS of around CHF 6 translates into a P/E of around 20x. Not dirt cheap, however, one is getting a very solid business which is completely debt free (yes, that still exists).

What’s next?
IVF Hartmann has had some difficult months but mostly as a result of short-term problems, which should be solved in due course. It’s without doubt that IVF’s wide range of products and market share will continue to grow. After dropping from approx. CHF 190 per share to CHF 123, it seems now that the worst is over and better times ahead. If not right away – no issue at all – there are no banks or creditors pushing around.

Current Price
CHF 123.00 per share

Disclosure
As with most shares discussed on here, the author is long VBSN.

Altice USA (NYSE:ATUS)

Intro
Altice USA is one of the largest broadband communications and video services providers in the US, delivering broadband, video, mobile, proprietary content and advertising services to more than 5 million residential and business customers across 21 states. While the video segment has lost some ground in the last years, broadband was able to more than compensate for it.
Altice USA went public at $30 per share in 2017. After trading as high as ~$37 per share, the price has recently gone back to its low in 2018 at approx. $15 and shows attractive valuation metrics.

Valuation
From 2018 to 2020, the company has increased revenues from $9.6bn to $9.9bn, while adj. EBITDA has grown from $4.2bn to $4.4bn. This translated into free cash below between $1.2bn and $1.9bn. The first nine months of 2021 depict an adj. EBITDA of $3.3bn and a free cash flow of $1.3bn, making one assume that 2021 will likely show similar numbers as last year.
With a market cap of $6.9bn and net debt of $24.6bn, EV amounts to $31.5bn; hence an EV/EBITDA of ~7.1x results. If we compare free cash flow to equity with the market cap, a free cash flow yield of around 20% is derived.
While Altice USA shows leverage ratios that are higher than typically preferred, the current debt load seems manageable with only small-sized maturities until 2025.

What’s next?
Altice USA has been a share repurchaser par excellence! In 2018, it bought back shares for $500m, $1.7bn in 2019 and more than $4.8bn in 2020. This year’s buybacks will amount to almost $1bn as well. Since the IPO, the share count has therefore come down from approx. 730m to 455m, a reduction of ~37%.
If Altice USA keeps up its share repurchases while slightly growing its business, shareholders should be well rewarded and prices in the area of >$30 should be possible again.

Current Price
$15.07 per share