Visteon (VC) Shares Priced to Move - Barron's
Tweet
Share
E-mail
Get Alerts VC Hot Sheet
Join SI Premium – FREE
Visteon Corp. (NYSE: VC) shares are in positive territory early Monday following a bullish article in Barron's over the weekend.
Barron's believes bankruptcy was a great option for Visteon. Over the last five years ending in 2010, Visteon has shrunk headcount by 45 percent, compressed sales 56 percent, and reduced about $2.1 billion in debt. Visteon currently holds $5 per share in cash.
Despite all the good news, Visteon shares have sunk 36 percent on the year -- the worst in its group -- after a 50 percent increase in 2010.
Visteon has increased it's percentage of sales in Asia from 12 percent in 2005 to 40 percent last year. Additionally, Visteon's various assets, including manufacturing partnerships in China and Korea, are worth about $85 per share.
The company is on track to earn about $3.80 per share on revenue of $8.1 billion in fiscal 2011. Analysts see earnings expanding 46 percent to $5.56 in 2012, with shares expected to increase above the $80 price level. Currently, Visteon stock is going for 8.5x fiscal 2012 earnings expectations, with 3.9x enterprise value-to-EBITDA. The numbers are below rivals Federal Mogal (Nasdaq: FDML) and Johnson Controls (NYSE: JCI).
J.D. Powers predicts auto sales will climb 6 percent for 2011, to 76.4 million units, and jump an additional 10.5 percent in 2012 to 84.4 million units, both a bullish case for Visteon, as well as the rest of the auto sector.
As said, Visteon is more international than it was before filing for bankruptcy. North American sales shrank from 61 percent of revenue to just 16 percent. Also, Visteon draws about 28 percent of revenue from its once-parent company Ford Motor (NYSE: F), and now Korean automakers Hyundai and Kia Motors contributed about 30 percent to the top line.
Growth is there as well, with Visteon reporting $563 million in new business for the first half of 2011, compared with $606 million for all of 2010. The company currently has a backlog of $900 million.
One analyst contends Visteon is the most mispriced of all the publicly traded auto names. Visteon has a 70 percent stake in Korea-based Halla Climate Control and 50 percent joint venture with SAIC Motor, just a few of it's current Asian holdings. The analyst says those two holdings alone are worth $50 per share for Visteon.
Finally, one option currently being mulled at the top of Visteon would be a break-up of the company. Nothing has been announced yet, but some bulls on the stock maintain that there is value yet to be unlocked in Visteon, and a split of divisions may be the quickest route to realizing potential. Visteon will probably keep its climate control division, which added 48 percent to revs in 2010, but could sell its interiors and lighting segments. Buying the other 30 percent in Halla Climate Control might also be another consideration.
Or, Visteon may go private again with another takeover. Some speculate Johnson Controls might pull the trigger, as it seeks to gain more exposure to the Asian market.
Visteon is up about 0.5 percent Monday, shirking the broader-market move.
Barron's believes bankruptcy was a great option for Visteon. Over the last five years ending in 2010, Visteon has shrunk headcount by 45 percent, compressed sales 56 percent, and reduced about $2.1 billion in debt. Visteon currently holds $5 per share in cash.
Despite all the good news, Visteon shares have sunk 36 percent on the year -- the worst in its group -- after a 50 percent increase in 2010.
Visteon has increased it's percentage of sales in Asia from 12 percent in 2005 to 40 percent last year. Additionally, Visteon's various assets, including manufacturing partnerships in China and Korea, are worth about $85 per share.
The company is on track to earn about $3.80 per share on revenue of $8.1 billion in fiscal 2011. Analysts see earnings expanding 46 percent to $5.56 in 2012, with shares expected to increase above the $80 price level. Currently, Visteon stock is going for 8.5x fiscal 2012 earnings expectations, with 3.9x enterprise value-to-EBITDA. The numbers are below rivals Federal Mogal (Nasdaq: FDML) and Johnson Controls (NYSE: JCI).
J.D. Powers predicts auto sales will climb 6 percent for 2011, to 76.4 million units, and jump an additional 10.5 percent in 2012 to 84.4 million units, both a bullish case for Visteon, as well as the rest of the auto sector.
As said, Visteon is more international than it was before filing for bankruptcy. North American sales shrank from 61 percent of revenue to just 16 percent. Also, Visteon draws about 28 percent of revenue from its once-parent company Ford Motor (NYSE: F), and now Korean automakers Hyundai and Kia Motors contributed about 30 percent to the top line.
Growth is there as well, with Visteon reporting $563 million in new business for the first half of 2011, compared with $606 million for all of 2010. The company currently has a backlog of $900 million.
One analyst contends Visteon is the most mispriced of all the publicly traded auto names. Visteon has a 70 percent stake in Korea-based Halla Climate Control and 50 percent joint venture with SAIC Motor, just a few of it's current Asian holdings. The analyst says those two holdings alone are worth $50 per share for Visteon.
Finally, one option currently being mulled at the top of Visteon would be a break-up of the company. Nothing has been announced yet, but some bulls on the stock maintain that there is value yet to be unlocked in Visteon, and a split of divisions may be the quickest route to realizing potential. Visteon will probably keep its climate control division, which added 48 percent to revs in 2010, but could sell its interiors and lighting segments. Buying the other 30 percent in Halla Climate Control might also be another consideration.
Or, Visteon may go private again with another takeover. Some speculate Johnson Controls might pull the trigger, as it seeks to gain more exposure to the Asian market.
Visteon is up about 0.5 percent Monday, shirking the broader-market move.
Are you missing key trading opportunities? Upgrade to StreetInsider Premium and get a step ahead of the market - FREE TRIAL!
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
Barron's, Bankruptcy, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
