In today’s note, we discuss the recent earnings reports from Kopin Corporation (KOPN), Adient (ADNT), and Bayer (BAYRY).
Our note also includes the monthly Catalyst Report, which we encourage you to look through. This report is a listing of a few companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs, cyclical turnarounds and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.
Kopin Corporation (KOPN) reported Q1 2024 revenues of $10.0 million, a 7% decrease from the previous year, despite an 18% increase in product revenues. Defense revenues rose by 28%, offsetting a 17% drop in industrial revenues. The quarter featured a strong 2.7:1 book-to-bill ratio and anticipates double-digit revenue growth for 2024. The period included significant new orders, such as a Naval Warfare Research Contract, but faced a substantial legal setback with a jury verdict in the Blue Radios litigation, leading to a potential $24.8 million liability.
Adient (ADNT) announced its Q2 2024 financial results with a GAAP net income of -$70M and EPS of -$0.77, but an adjusted EPS of $0.54. Adjusted EBITDA rose to $227M, marking a year-over-year increase of $12M and a margin improvement of 60 basis points to 6.1%. Despite reduced revenues, they reported strong performance due to effective cost management and operational efficiencies. The company ended the quarter with gross and net debts of approximately $2.5B and $1.6B respectively, and cash equivalents of $905M. Adient also repurchased $50M worth of shares – totaling $150M year to date – but lowered its FY24 outlook due to slow launch ramps, adverse customer mix, and reduced electric vehicle production in the Americas and EMEA.
Bayer AG (BAYRY) reported a slight decline in first-quarter 2024 earnings, with core earnings per ADR dropping to €0.77 from €0.79 year over year. Total sales decreased by 4.3% to €14.95 billion, with a minimal 0.6% drop after currency and portfolio adjustments. The Crop Science segment saw a 3% decrease, primarily due to lower herbicide volumes and fungicide sales in EMEA. Pharmaceuticals revenue rose 3.9% to €4.4 billion, driven by strong sales in new cancer and kidney disease treatments. Consumer Health dipped by 1.8% after the previous high-demand quarter. Bayer reaffirmed its 2024 guidance with expected sales between €47-€49 billion and adjusted core earnings per share forecasted to be between €4.80 and €5.20.
Friday, May 10, 2024, Subscribers-Only Podcast:
Covering recent news and analysis for our portfolio companies and other topics relevant to value/contrarian investors.
Today’s podcast is about 16 minutes long and covers:
- Initial note
- Introduction – thanks to subscribers for their comments, and a brief synopsis of the newest Catalyst Report.
- A quick rundown of the three CTL companies that reported this week.
- Comments on recommended companies
- Duluth Holdings (DLTH) announced plans to release its 1Q 2024 financial results on Thursday, May 30, 2024, before the market opens.
- Kohl’s (KSS) declared a regular quarterly dividend of $0.50 per share with an ex-dividend date of June 12, 2024. Shareholders of record at the close on that day will receive payment on June 26, 2024.
- Walgreens Boots (WBA) is reportedly considering selling its U.K. Boots drugstores, currently valued at $8.8 billion. According to Bloomberg, the company is initiating early-stage discussions with potential buyers.
- Volkswagen (VWAGY) may sell up to 1 billion euros ($1.08 billion) of stock in its truckmaking subsidiary Traton SE, according to Reuters. The sale, potentially occurring within the next few weeks through an accelerated bookbuilding with institutional investors, could represent about a 6% stake in Traton.
Please know that while I don’t yet personally own shares of all Cabot Turnaround Letter recommended stocks – including the stocks mentioned in this note – that will materially change over time.
Portfolio
| Market Cap | Recommendation | Symbol | Rec. Issue | Price at Rec. | Current Price * | Current Yield | Rating and Price Target |
| Small cap | Gannett Company | GCI | Aug 2017 | 9.22 | $ 3.69 | - | Buy (9) |
| Small cap | Duluth Holdings | DLTH | Feb 2020 | 8.68 | $ 4.44 | - | Buy (20) |
| Small cap | Dril-Quip | DRQ | May 2021 | 28.28 | $ 19.37 | - | Buy (44) |
| Small cap | Kopin Corp | KOPN | Aug 2023 | 2.03 | $ 0.83 | - | Buy (5) |
| Small cap | Ammo, Inc. | POWW | Oct 2023 | 1.99 | $ 2.48 | - | Buy (3.50) |
| Mid cap | Mattel | MAT | May 2015 | 28.43 | $ 18.63 | - | Buy (38) |
| Mid cap | Adient plc | ADNT | Oct 2018 | 39.77 | $ 29.26 | - | Buy (55) |
| Mid cap | Xerox Holdings | XRX | Dec 2020 | 21.91 | $ 13.93 | 7.2% | Buy (33) |
| Mid cap | Viatris | VTRS | Feb 2021 | 17.43 | $ 10.93 | 4.4% | Buy (26) |
| Mid cap | TreeHouse Foods | THS | Oct 2021 | 39.43 | $ 35.43 | - | Buy (60) |
| Mid cap | The Western Union Co. | WU | Dec 2021 | 16.40 | $ 13.13 | 7.2% | Buy (25) |
| Mid cap | Brookfield Re | BNRE | Jan 2022 | 61.32 | $ 44.29 | 0.7% | Buy (93) |
| Mid cap | Polaris | PII | Feb 2022 | 105.78 | $ 84.04 | 3.1% | Buy (160) |
| Mid cap | Goodyear Tire & Rubber | GT | Mar 2022 | 16.01 | $ 12.93 | - | Buy (24.50) |
| Mid cap | Janus Henderson Group | JHG | Jun 2022 | 27.17 | $ 34.01 | 4.6% | Buy (67) |
| Mid cap | Six Flags Entertainment | SIX | Dec 2022 | 22.60 | $ 26.02 | - | Buy (35) |
| Mid cap | Kohl’s Corporation | KSS | Mar 2023 | 32.43 | $ 25.58 | 7.8% | Buy (50) |
| Mid cap | Frontier Group Holdings | ULCC | Apr 2023 | 9.49 | $ 5.95 | - | Buy (15) |
| Mid cap | Advance Auto Parts | AAP | Sep 2023 | 64.08 | $ 74.07 | 1.4% | Buy (98) |
| Mid cap | Mohawk Industries | MHK | Jan 2024 | 103.11 | $ 120.61 | - | Buy (165) |
| Mid cap | VF Corporation | VFC | Mar 2024 | 16.24 | $ 12.95 | 2.8% | Buy (25) |
| Mid cap | Barnes Group | B | Apr 2024 | 36.55 | $ 40.83 | 1.6% | Buy (55) |
| Mid cap | First Quantum Minerals | FM | Apr 2024 | 15.93 | $ 19.13 | 1.6% | Buy (40) |
| Large cap | General Electric | GE | Jul 2007 | 304.96 | $ 159.77 | 0.2% | Buy (160) |
| Large cap | Nokia Corporation | NOK | Mar 2015 | 8.02 | $ 3.92 | 3.4% | Buy (12) |
| Large cap | Macy’s | M | Jul 2016 | 33.61 | $ 19.59 | 3.4% | Buy (25) |
| Large cap | Newell Brands | NWL | Jun 2018 | 24.78 | $ 8.11 | 3.4% | Buy (39) |
| Large cap | Vodafone Group plc | VOD | Dec 2018 | 21.24 | $ 9.80 | 10.4% | Buy (32) |
| Large cap | Berkshire Hathaway | BRK.B | Apr 2020 | 183.18 | $ 415.51 | - | HOLD |
| Large cap | Wells Fargo & Company | WFC | Jun 2020 | 27.22 | $ 61.06 | 2.3% | Buy (64) |
| Large cap | Western Digital Corporation | WDC | Oct 2020 | 38.47 | $ 72.63 | - | Buy (78) |
| Large cap | Elanco Animal Health | ELAN | Apr 2021 | 27.85 | $ 17.05 | - | Buy (44) |
| Large cap | Walgreens Boots Alliance | WBA | Aug 2021 | 46.53 | $ 18.27 | 5.5% | Buy (70) |
| Large cap | Volkswagen AG | VWAGY | Aug 2022 | 19.76 | $ 15.24 | 6.0% | Buy (70) |
| Large cap | Warner Bros Discovery | WBD | Sep 2022 | 13.13 | $ 8.06 | - | Buy (20) |
| Large cap | Capital One Financial | COF | Nov 2022 | 96.25 | $ 141.80 | 1.7% | Buy (150) |
| Large cap | Bayer AG | BAYRY | Feb 2023 | 15.41 | $ 7.82 | 6.9% | Buy (24) |
| Large cap | Tyson Foods | TSN | Jun 2023 | 52.01 | $ 60.97 | 3.2% | Buy (78) |
| Large cap | Agnico Eagle Mines | AEM | Nov 2023 | 49.80 | $ 69.95 | 2.3% | Buy (75) |
| Large cap | Fidelity Natl Info Services | FIS | Dec 2023 | 55.50 | $ 78.37 | 2.7% | Buy (85) |
| Large cap | Baxter International | BAX | Feb 2024 | 38.79 | $ 35.40 | 3.3% | Buy (60) |
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