HELE held its investor day today. It included a simple visual showing the hockey stick implied in its guidance from a couple weeks back both in sales and earnings. Additionally, it laid out a long term plan with estimates for 2030 with the company noting its stock price should be then, $228 to $398 depending on the multiple (it’s hard to recall a real company that tells you what its stock will be worth). That of course includes key assumptions around capital deployment and the EPS contribution, detailed out by year, with buyback, lower interest, and acquisition contribution. Mind you this is a house of brands that didn’t give strong color around brand investments, marketing messages, and developing the connection with the consumer. Rather it showed how when they put a bunch of Revlon stuff on the shelf at Walmart at a good price it sells, and how it intends to prioritize acquisitions in the out years vs deploying capital into driving organic growth. This confirms that HELE is and will continue to be what it has been for the last decade, a rollup that milks brands for margin, increasing distribution in brand dilutive channels (Walmart, Target, Amazon), only to see the brands lose relevance and stop growing. HELE says it’s undervalued relative to peers, but it’s not using the right peers. Given the rate environment, at 9.5x overstated adjusted EBITDA and 9% FCF yield we’d say this is expensive. Its rollup peers trade at a 15% free cash flow yield or higher.
*Hedgeye EPS includes share based compensation as an expense.
