|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Roundy’s Inc: An Undervalued and Undiscovered High Yielder
Posted by: Frank Voisin (IP Logged)
Date: March 6, 2012 07:48AM
A reader passed along this idea that I find compelling (though the debt load adds a dimension of risk that I like to avoid). Please leave your comments below.
If you have an investment idea that you would like to see featured here, email me.
Frank’s Disclosure: No position.
Roundy’s (RNDY) is the largest grocery retailer in Wisconsin and operates 158 grocery stores in Wisconsin, Minnesota and Illinois under the Pick ‘n Save, Rainbow, Copps, Metro Market and Mariano’s Fresh Market banners. The company trades at an attractive multiple of 7.1x 2012E EPS and (although not readily apparent to all) will soon begin paying a large dividend that currently equates to a 9% yield. The company went public in February and recently gave 2012 guidance, but is largely unknown since sell side analysts are still restricted from publishing on the company. However, with investors seeking yield and investments in what are considered recession resistant industries such as supermarkets, its not surprising RNDY’s is beginning to receive more investor attention.
The following table shows the number of stores operated by geographic market as of November 1, 2011:
Below is a list of the company’s market position in its primary markets:
The company went public in February, so much of the information in many databases (and the latest earnings press release) is incorrect since it is not pro forma for the offering. The below information is pro forma for the offering.
Why Stock Is Misunderstood
Stocks Discussed: RNDY,
Re Roundy s Inc An Undervalued and Undiscovered High Yielder
Posted by: ssg280 (IP Logged)
Date: March 6, 2012 11:30AM
So they us $110mm + cash on B/S to paydown the expensive 2nd lien facility, but raise another $675mm of TL + $125mm of Revolver (assuming its undrawn at close)?
I'm sure the TL / revolver are cheaper - just wanted to point this out as it's not mentioned clearly in the article above.
Stocks Discussed: RNDY,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.