CSTM - Embedded Expectations Analysis - 2019 05 28
Constellium N.V (CSTM:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 17.6x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about their ability to improve adjusted segment EBITDA, their liquidity, and the strength of their contact mix.Specifically, management may lack confidence in their ability to sustain run rate cost savings, generate fair return on capital, and improve adjusted segment EBITDA. Moreover, they may be exaggerating their liquidity and ability to deleverage, their ability to manage receivables and free cash flow, and the strength of their contract and product mix. Finally, they may be concerned about their outlook for North American automotive SAAR, the impact of market conditions on performance, and the rebalancing of their profit pool and profit supply chain.
Constellium N.V. designs and manufactures a range of innovative specialty rolled and extruded aluminum products, serving primarily the aerospace, packaging and automotive end-markets. Co. has a strategic footprint of manufacturing facilities located in the United States, Europe and China. Co.'s product portfolio commands higher margins as compared to less differentiated, more commoditized fabricated aluminum products, such as common alloy coils, paintstock, foilstock and soft alloys for construction and distribution. Co. organizes its business around three operating segments: Aerospace & Transportation, Packaging & Automotive Rolled Products, and Automotive Structures & Industry.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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