Essendant misses by $0.28, reports revs in-line; lowers FY16 outlook  (32.49 +0.49)
7/20/2016, 6:39:43 PM ET
  • Reports Q2 (Jun) adj earnings of $0.55 per share, $0.28 worse than the Capital IQ Consensus of $0.83; revenues rose 0.9% year/year to $1.35 bln vs the $1.36 bln Capital IQ Consensus, adj EBITDA of $50.9 mln compared to $65.8 mln last year.
  • Co lowers guidance for FY16 EPS to $2.15-2.30, prior $3.20-3.40 vs. $3.27 Capital IQ Consensus Estimate; sees FY16 revs of $5.4-5.475 bln, prior $5.4-5.6 bln vs. $5.47 bln Capital IQ Consensus Estimate. Free cash flow of $150 mln in 2H 2016 vs prior guidance for “Equal to or better than net income.”
  • “In light of the challenges we faced in the quarter and our reduced outlook for the balance of the year, we areaccelerating efforts to advance our strategy, improve margins and reduce costs.” The company continues to reposition the business for continued success despite marketplace headwinds, which includes a plan to accelerate efforts to advance our strategy, improve margins and reduce costs, and increase cash flow in the second half of 2016. The plan involves a number of actions including pricing that better aligns to cost to serve, merchandising excellence, continued reduction in discretionary expenses, a plan to reduce distribution center footprint, further simplification of the organization and lower fixed cost structure, as well as significant inventory reduction driven by lower purchasing levels.
  • “We plan to execute these actions while reducing our inventory levels over the balance of the year to improve the company’s return on investment.”
  • Courtesy of

ESND Essendant Inc is wholesale office supply company. They closed at $20.68 today, down $11.90.

Their current forward P/E based on guidance of $2.15/$2.30 is 9.6 The sector P/E is 17.2.

ESND reached deep value at $18.50 but support is at $17.14 with a tail at $15.94.

If ESND reaches $17.14 it is a screaming buy at that level. The most likely scenario is a reversal (cup & handle?) before it gets there.

If I buy before $17 I will let you know.

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