Atacadao: Trading Well Below Book Value And Betting On 2025 Turnaround

2025-01-29 08:07:01 ET

Summary

• Atacadao's path to profitability in 2025 looks clearer despite Brazil's challenging macroeconomic conditions, including high inflation and interest rates potentially reaching 15%.
• The company's stock is trading at a very discounted valuation, presenting an attractive risk-return scenario for potential appreciation in the short to medium term.
• The integration of Grupo BIG has taken longer than expected, impacting margins, but divestment plans and deleveraging efforts could boost profitability by 5% to 6% in 2025.
• Despite the tough macroeconomic environment, Atacadao's solid balance sheet and strategic initiatives make it a compelling investment, trading at just 0.57x book value.

Investment Thesis

The Brazil-based cash and carry retailer Atacadão ( OTCPK:ATAAY ), also known as Grupo Carrefour Brasil, seeks in 4Q24 to restore investors' confidence that the path to profitability should be clearer in 2025. The pressures of a macroeconomic scenario in Brazil, marked by inflation outside the country's central bank target and an interest rate that could reach 15% in 2025, have directly weighed on the prospect of improving net margins and finally reaping the benefits of the synergy of the incorporation of the BIG Group's assets....

Read the full article on Seeking Alpha

For further details see: