Cannae Holdings, Inc.

CNNE Details

Cannae Holdings, Inc. (NYSE: CNNE) is a holding company that actively manages and operates a group of companies and assets and makes new majority and minority stock portfolio investments in companies. Minority investments in Dun & Bradstreet Holdings, Inc. (D&B), Ceridian HCM Holdings, Inc. (Ceridian), Paysafe Limited (Paysafe), Alight, Inc. (Alight), Optimal Blue Holdco, LLC (Optimal Blue), AmeriLife Group, LLC (AmeriLife), and QOMPLX, Inc. (QOMPLX) were the company's primary investments as of December 31, 2021. CNNE also has a controlling stake in O'Charley's Holdings, LLC (O'Charley's) and 99 Restaurants Holdings, LLC (99 Restaurants) and other stock and debt investments.

Latest News:

• Sale of Optimal Blue: CNNE sold its 20% ownership in Optimal Blue Holdco, LLC (Optimal Blue) to Black Knight, Inc. for USD 578 million on February 15, 2022. Optimal Blue has been a terrific business and outperformer from day one of investment, culminating in a 2x return on USD 289 million investment made less than 18 months ago, stated by CNNE Chairman William P. Foley II.

FY21 Results:

• Expansion in Topline: The company's total operating revenue increased by 26.72% to USD 742.2 million in FY21 (ended December 31, 2021) from USD 585.7 million in FY20, owing to a 25.91% increase in Restaurant revenue.
• Registered Net Losses: CNNE, on the other hand, reported a net loss of USD 287 million in FY21, compared to a profit of USD 1.79 billion the previous year.
• Strong Balance Sheet: As of December 31, 2021, the company has USD 85.80 million in cash and cash equivalents and USD 16.40 million in total debt.

Key Risk:

• Macro-Economic Risks: Sharp volatility in the global financial market, adverse price movements in shares and bond holdings, Forex risks, talent retention, and other macroeconomic concerns pose hazards to the company.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

CNNE's stock price has fallen 31.38% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 22.83 to USD 42.35. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 30.00.

Considering the significant correction in the stock price, proven track record, inorganic growth programs, strong balance sheet, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 23.99, down 3.38% as of March 11, 2022.

Three-Year Technical Price Chart (as of March 11, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.