Forum Topics HSN HSN Bull Case

Pinned straw:

Added 2 months ago

My bull case for HSN is after the last few years of deleveraging they are due an acquisition which I believe will be a catalyst for a rerate. I'd be surprised if there is no acquisition this year, more likely in the next few months.

While we wait HSN should generate roughly $50M in free cash flow on about a $1 billion market cap equating to around a 5%+ FCF yield. For a defensive, sticky client business i think this is reasonable especially if we get rate cuts at some point in the next 24 months.

The share price has been consolidating also recently. I do wish they'd cut the unfranked dividend and use it for buybacks or to fund the acquisition

It's not the highest quality serial acquirer as highlighted in the attributes here on page 19 - req.no/wp-content/uploads/2023/12/REQ-Deep-Dive-Acquisition-driven-Compounders-December-2023.pdf - but still decent.


Strawman
2 months ago

There's little organic growth with Hansen, but I agree that a 5% free cash flow yield makes it interesting. And, as you say @Mujo, they have some form with acquisitions.

Your post prompted me to reach out to management who have agreed to come and speak with us after their results in February.

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Mujo
2 months ago

Thanks @Strawman, hearing from them direct would great.

Yes definitely some organic growth too which they have guided for to boot.

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