FINL: Man Alive Deal = No Brainer

It's about time. FINL is finally jettisoning its perennially money-losing 'Man Alive' business for $7mm. I could care less about price at this point. All I care about is that the distraction is gone. This concept worked for only a fleeting moment - unfortunately that was around the time FINL bought and build it. It lost $13mm last year, which nets out to 1 point in operating margin. Does not sound like much until you take into account that the company only had 3.2% operating margins last year. Man Alive hurt EPS by 32% last year. What's funny is that the Street has FINL EPS growing by only a dime over 12 months. But add back the Man Alive loss or $0.15, lower interest expense, and more efficient working capital, and I get to something closer to $0.20. So using the Street's $0.58 next next year as a baseline, this math nudges that closer to $0.78. In that regard, we're still looking at less than 10x EPS for a more focused business with higher incremental ROIC. This name had not been at the top of my list despite my positive stance on the footwear space due to a tougher 2H setup relative to its peers. But even after today's 6% move it's not looking too shabby...

 

FINL: Man Alive Deal = No Brainer - 6 22 2009 10 33 35 AM



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