Cannae Holdings, Inc.

CNNE Details

Cannae Holdings, Inc. (NYSE: CNNE) is a holding company that actively manage and operate a group of firms and investments and make a new majority and minority equity portfolio investments in businesses. As of September 30, 2021, the company's primary investments consisted of 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). CNNE also has a controlling stake in O'Charley's Holdings, LLC (O'Charley's) and 99 Restaurants Holdings, LLC (99 Restaurants) and additional stock and debt investments.

Latest News:

• Investment in PSFE: On January 04, 2022, Paysafe Limited (NYSE: PSFE) announced that CNNE, through its subsidiary, purchased ~5.7 million shares of PSFE's common stock amounting to USD 22.2 million through a series of open market transactions in late December 2021, under the Company's securities trading policy and applicable securities laws. CNNE owned 59,758,641 common shares as of December 31, 2021, representing roughly 8.26% of PSFE's outstanding common shares.

• Share Repurchases: On December 08, 2021, CNNE announced that it is actively repurchasing common stock under its previously authorized stock repurchase programs. It has remaining authority to acquire ~11.6 million shares under previous authorizations.

Q3FY21 Results:

• Double-Digit Growth in Revenue: The company reported a YoY growth of 33.14% in total operating revenue to USD 186.0 million in Q3FY21 (ended September 30, 2021) compared to USD 139.7 million in Q3FY20, driven by 35.32% growth in Restaurant revenue.
• Reported Net Losses: However, CNNE reported net loss of USD 121.0 million in Q3FY21 compared to a net profit of 131.9 USD million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company stood with cash and cash equivalents of USD 234.2 million, with total debt of USD 227.80 million.

Key Risks:

The company is exposed to a variety of risks ranging from sharp volatility in the global financial market, adverse price move in the equity and bond holdings, forex risks, talent retention and other macro-economic risks.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

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

CNNE Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CNNE's stock price has decreased 24.10% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 29.16 to USD 42.41. The leading momentum indicator 14-day  RSI Index is at 34.39. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 36.45.

Considering the company's growth prospects, significant track record, strong balance sheet, associated risks, and current valuation we recommend a "Buy" rating on the stock at the closing price of USD 30.74, up 0.92% as of January 24, 2022.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.