Few Aspects Of Clarus' Sales Of Precision Sport Segment Seems Odd, Says Analyst
Portfolio Pulse from Shivani Kumaresan
Raymond James analyst Joseph Altobello finds Clarus Corp's sale of its Precision Sport Segment, including Sierra and Barnes bullet and ammunition businesses, to an undisclosed non-strategic buyer for $175 million in cash, as odd. The segment is highly profitable, expected to generate $26.6 million of adjusted EBITDA in 2023. No conference call was scheduled to discuss the sale, which represents the majority of Clarus's profitability. The sale price values the segment at 6.8x the 2024 adjusted EBITDA estimate, favorable compared to the ~5x EBITDA for Vista Outdoor Inc's Sporting Products segment sale. However, the remaining businesses of Clarus are valued at a high EV/EBITDA multiple of 16.5x. The sale could make Clarus a more attractive acquisition target. Clarus shares dropped by 0.65% to $6.85.
January 02, 2024 | 7:19 pm
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NEUTRAL IMPACT
Vista Outdoor Inc's sale of its Sporting Products segment is mentioned as a comparison to Clarus's sale, with a lower EBITDA multiple of ~5x.
Vista Outdoor is mentioned for comparison purposes, and while the information could be of interest to investors, it does not directly indicate a short-term impact on VSTO's stock price.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 50
NEGATIVE IMPACT
Clarus Corp's sale of its Precision Sport Segment for $175 million is seen as odd by an analyst, with no conference call to discuss the details. The segment is a major contributor to the company's profitability.
The sale of Clarus's most profitable segment without a detailed discussion could raise concerns among investors about the company's future profitability and strategy, likely leading to a negative short-term impact on the stock price.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90