![]() In 2014, Atento generated 46% of its sales from Telefonica Group, but the ratio has been steadily decreasing as Atento broadens its customer base and wins new contracts. At the time of the acquisition, Atento signed a MSA agreement through which Telefonica committed to minimum revenue contracts through 2021. In December 2012, Bain acquired Atento from Telefonica Group from EUR 1.05 billion. In 1999, global telecommunications group, Telefonica SA, formed Atento in order to consolidate its CRM services into a single subsidiary. The private equity overhang should subside over the next several years as Bain sells down its stake and the liquidity of the stock increases. I believe that Atento's stock will appreciate as management executes its strategy, and as investors gain more data points that confirm the company’s growth profile and attractive economics. Atento, which in local currency terms is growing at a faster rate than Teleperformance, trades at 5x forward EBITDA and on 10x forward EPS. Teleperformance (RCF FP), Atento’s closest peer, trades at ~9x forward EBITDA and on 16x forward EPS. I believe the poor sentiment has created an attractive opportunity to invest in a good business that has a good return on capital, attractive long term organic growth prospects, and is undervalued on both an absolute and relative basis. The small float and low liquidity have been a further depressant. It opened at $13.75 and closed down nearly 15% on its first day of trading. Due to poor demand for Latin America exposed businesses, the deal was downsized and ultimately priced at $15 per share in October of 2014. The original pricing range was $19 to $22 per share. Atento is a Bain Capital controlled (85% current ownership) LBO that was taken public in a very inhospitable environment for Latin America related IPO’s. It has a legacy EMEA business that represents 15% of revenues, and a small, but growing US business. Atento offers customer relationship management and business process outsourcing services primarily in Latin America. stock (NYSE:ATTO) at current prices ($13.93) is a compelling investment opportunity with potential for 100% upside over the next two to three years.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |