Author Topic: ATTO - Atento  (Read 29056 times)

StevieV

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Re: ATTO - Atento
« Reply #110 on: December 18, 2020, 03:14:14 PM »
I don't think the Ex-Goldman consensus EBITDA of $183m in 2021 and $212m in 2022 makes sense.

Q3 EBITDA was $44.8.  The 2021 estimate projects almost no improvement to that run-rate.  The 2022 estimate then projects a 15% improvement versus 2021.  Why no improvement in 2021 and then a big improvement in 2022?  I don't think that will play out.

I think 2021 estimate is too low. 


SafetyinNumbers

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Re: ATTO - Atento
« Reply #111 on: December 18, 2020, 08:01:51 PM »
I don't think the Ex-Goldman consensus EBITDA of $183m in 2021 and $212m in 2022 makes sense.

Q3 EBITDA was $44.8.  The 2021 estimate projects almost no improvement to that run-rate.  The 2022 estimate then projects a 15% improvement versus 2021.  Why no improvement in 2021 and then a big improvement in 2022?  I don't think that will play out.

I think 2021 estimate is too low.

I agree.

Morgan Stanley was the broker that update their EBITDA estimates for 2021 ($191m) and 2022 ($212m) that pulled the consensus up a bit earlier in the week. The weird thing is that their target is $10.50 based on a multiple of 3x EV/EBITDA which they describe as a 75% discount to peers.

Meanwhile Goldman has a $114m EBITDA estimate and have a 6x EV/EBITDA multiple for their target.

Both are just bizarre especially as someone who used to work in equity research and helped determine estimates/targets/ratings.

Using Goldman's multiple on MS's estimates spits out a target of $47.

SafetyinNumbers

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Re: ATTO - Atento
« Reply #112 on: January 01, 2021, 08:43:38 AM »
Reproduced from this board: https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/favorite-stock-for-2021/

Iím doubling down on Atento (ATTO) for 21.
 
I think Covid obscured the operational improvements in 2020. Net debt has declined materially in 2020 ($595m to $515m) to make the stock relatively cheaper and safer in my opinion. I held on (and added early unfortunately) through the volatility and feel better about the business than a year ago.
 
Management did a great job managing through Covid and the decline in the BRL but the hit to headline EBITDA was hard in Q1 and Q2 especially. EBITDA margins bounced back to 12.7% in Q3 and Iím expecting improvement in 2021 to 14%.
 
USDBRL has been stable for three quarters @5.4 and is currently below that average (which is good!). If oil rallies as many expect, ATTO could be an indirect beneficiary through its emerging market currency exposure.
 
At current exchange rates, ATTO could put up north of $200m in EBITDA in 2021, at 8x EBITDA which is a low end multiple, my intrinsic value estimate is $67 using $500m in net debt which accounts for dilution of options and RSUs. Lots of risk in that estimate of course but too much in the price of ATTO, in my opinion.
 
Street estimates for 2021, are very deceptive. The ďstreetĒ is expecting $160m in EBITDA (11.4% EBITDA margin) but thatís made up of three estimates:
 
Barrington $174m
Goldman $114m
Morgan Stanley $192m
 
To the extent there are active managers left, I have been in the room when a PM asks an analyst what came up on the quant screen. In this case, Atento screens at 4.6x consensus EV/EBITDA. The PM will ask the analyst who covers it, heíll ask what the multiple is on Goldmanís estimates and the analyst will correctly answer 7.8x. You see Goldmanís net debt ($686m vs $515m) is way higher because itís EBITDA estimate is way lower.
 
The PM will then look the analyst directly in the eye and say ďCan we short it or buy puts?Ē and the analyst will say ďNo, it has no listed options and itís illiquid.Ē Thatís the end of the discussion. What the PM doesnít know is that Goldman has not updated their estimates since before ATTO reported $45m in EBITDA in Q3. In fact, their 2020 EBITDA estimate is $94.9m while ATTO has already reported $107.8m 9MTD.
 
Goldman will eventually drop coverage or change their estimate if ATTO decides to pursue refinancing the 2022 debt in January forcing them to update the street on Q4 preliminary estimates which will likely improve on Q3. If consensus moves to Morganís $192m in EBITDA, even at the current EV/EBITDA multiple of 4.6x that would result in an ATTO price of $25.
 
If the active funds donít come, maybe the quant funds will. If there is a lot of variation in estimates, it makes sense for low volatility quant strategies (most of them!) to avoid those stocks. ATTOís estimates will become significantly less variable if Goldman updates or removes itís estimates although the former is better as more estimates are helpful.
 
Recently spun out peer Concentrix (CNXC) trades at around 9x EV/EBITDA.and has very strong free cash flow. Their business strategy (growth by acquisition) and market position (big in Asia and smaller in LATAM) makes them seem like the perfect dance partner for Atento in 2022 when ATTO has achieved 15% EBITDA margins and has grown sales for a couple of years (assuming stable exchange rates).
 
At 8x 2023E EBITDA of $270m (assumes 16% EBITDA margin expectations with 5% CC revenue growth) which CNXC would pay in the summer of 2022, ATTO would fetch ~$100/share give or take. ATTO would still be accretive to CNXC even if paying a fair multiple because of synergies and CNXC has a much lower cost of capital and would save on refinancing the bonds.
 
Itís possible, CNXC wants to buy ATTO now but the three controlling shareholders of ATTO, GIC, HPS and Farallon (~70% ownership) will want a fair price and I think they recognize itís a lot higher than here.
 
I donít know whatís going to happen but with the stock less than $14 and a recently incentivized management team and BOD (1.7m options with an 8 handle in August), I like the odds.

Next week should see some stock for sale as RSUs vest today and there is some forced selling to pay taxes next week by the RSU trustee. I'm estimating about 150k shares for sale.

SafetyinNumbers

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Re: ATTO - Atento
« Reply #113 on: January 13, 2021, 11:23:41 AM »

It looks like Goldman updated its estimates for $ATTO yesterday because consensus changed dramatically although I havenít seen the note.

Consensus EBITDA has raced higher to $186.5m and $207.8m for 2021E and 2022E, respectively.

Now trading at 3.9x 2021E EV/EBITDA.

The thread below shows the changes in EBITDA

https://twitter.com/BrownMarubozu/status/1349434852244926471?s=20

SafetyinNumbers

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Re: ATTO - Atento
« Reply #114 on: February 01, 2021, 05:37:13 AM »
Big beat for $ATTO on Q4. I put my preliminary analysis on Twitter.

https://twitter.com/brownmarubozu/status/1356226519413256193?s=21

StevieV

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Re: ATTO - Atento
« Reply #115 on: February 01, 2021, 10:47:43 AM »
Great news!

As you note, Q4 mid-point annualized would mean 2021 EBITDA of $210 million.  As I posted earlier in the thread, I thought the adjusted analysts expectations of $183 were too low.  Almost certainly will be.

I also think $210 is going to turn out to be lower than actual 2021 EBITDA.  I don't think we are near the top in EBITDA margins or quarterly results.  If Q4 2020 run-rate is $210, I'd expect 2021 to be higher, perhaps by a decent bit depending on currency.

I know the $210 number wasn't a prediction.

SafetyinNumbers

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Re: ATTO - Atento
« Reply #116 on: February 01, 2021, 11:13:01 AM »
Great news!

As you note, Q4 mid-point annualized would mean 2021 EBITDA of $210 million.  As I posted earlier in the thread, I thought the adjusted analysts expectations of $183 were too low.  Almost certainly will be.

I also think $210 is going to turn out to be lower than actual 2021 EBITDA.  I don't think we are near the top in EBITDA margins or quarterly results.  If Q4 2020 run-rate is $210, I'd expect 2021 to be higher, perhaps by a decent bit depending on currency.

I know the $210 number wasn't a prediction.

I think you are right.

Consensus EBITDA margins are 12.8% for 2021E with revenue estimates just below annualized Q4.

Annualizing Q4 revenue (mid point) and adding 3% growth and using 14.5% margins gives us ~$220m in EBITDA. The growth and margins might be low with that estimate but itís still easy to underwrite the investment at these prices.

The stock might actually be cheaper than it was before we got confirmation of the results despite the stock being up 14% today.

SafetyinNumbers

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Re: ATTO - Atento
« Reply #117 on: February 01, 2021, 03:37:11 PM »
Nice article by Atentoís CEO.

https://www.fastcompany.com/90599103/next-generation-is-the-new-generation-in-customer-experience

I donít think itís a coincidence that this article, the debt refinancing and the customer event tomorrow for Atento are all happening the same week.

This is about narrative change and ultimately multiple expansion when analysts/investors recognize that this new digital growth is expanding margins.

StevieV

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Re: ATTO - Atento
« Reply #118 on: February 02, 2021, 05:45:41 AM »
Well, another go at the debt offering.  They pulled their attempt last fall.  No way they do that a second time, right?

If this goes correctly, they should do a follow-up announcing with the pricing in a day or two.

SafetyinNumbers

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Re: ATTO - Atento
« Reply #119 on: February 24, 2021, 08:44:06 AM »
Posted the below yesterday on different thread.



Added a touch more ATTO.

A full position for me but I trade around the edges.

I can't see a specific reason for the sell off but it is up a lot this year and some fund might be looking to take profits.

They report next Wednesday night with the conference call on Thursday morning (Mar 4) at 10 am.

At the very least we should have analyst estimates increased post report as all of the analysts have been restricted because of a debt refinancing since they pre-reported better than expected revenues and EBITDA.

Consensus 2021 EBITDA is $186.5m and they reported an EBITDA range of $50-55m for Q4. That should lift consensus above $200m. At 5% cc revenue growth and 14% margins, 2021E EBITDA would be $217m. They pre-reported margins of 14-14.5% for Q420 so it doesn't seem like a big stretch to assume that for the full year. Each point of margin adds ~$15m to EBITDA.

At $22.50, the company is trading at 4.6x EV/EBITDA on current consensus 2021E EBITDA. If consensus jumps to $217, at 4.6x, the stock would trade at $30.50.

The beauty of leverage and only 16.3m shares outstanding on a fully diluted basis.

I am a valueHODLer here until the strategic sale of the company in 2022 or 2023. Peers trade 8-15x EBITDA. If a sale could be based on 2023E estimates, assuming the same sales growth and a lift of EBITDA margins to 14.5% or the half way point of guidance. We could have a selling price of $90+ based on the low end of the comp range at 8x.

Still a long way to go from here of course but I think it's important to understand the roadmap.