ACCO BRANDS Corp (NYSE: ACCO)

Sector: Industrials Industry: Business Equipment & Supplies CIK: 0000712034
Market Cap 461.15 Mn
P/B 0.64
P/E 7.23
P/S 0.25
ROIC (Qtr) 1.55
Div Yield % 1.82
Rev 1y % (Qtr) -8.84
Total Debt (Qtr) 962.30 Mn
Debt/Equity (Qtr) 1.49
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About

ACCO Brands Corp, a Delaware corporation, is a prominent player in the global consumer, technology, and business branded products industry. The company is often represented by the stock symbol ACCO and is known for its diverse portfolio of well-known brands and innovative product solutions used in schools, homes, and at work. ACCO Brands has established itself as a leader in the product categories it operates in, with a strong presence in the U.S., Europe, Australia, Canada, Brazil, and Mexico. The company's operations are divided into three segments:...

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Investment thesis

Bull case

  • Robust free cash flow of 71.20M exceeds capital expenditure of 19.60M by 3.63x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 1.08B provides 3.64x coverage of working capital 295.90M, indicating strong operational backing.
  • Tangible assets of 1.08B provide robust 5.32x coverage of other current liabilities 202.40M, indicating strong asset backing.
  • Cash reserves of 82.50M provide ample 8.33x coverage of acquisition spending 9.90M, enabling strategic growth opportunities.
  • Strong free cash flow of 71.20M provides 7.19x coverage of acquisition spending 9.90M, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 90.80M barely covers its investment activities of (9.70M), with a coverage ratio of -9.36, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 82.50M against inventory of 315.30M, the 0.26 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 90.80M provides thin coverage of dividend payments of (27.20M) with a -3.34 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 99.50M show weak coverage of depreciation charges of 73.30M, with a 1.36 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 71.20M represents just -1.19x of debt issuance (59.60M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Business Equipment & Supplies
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EBF Ennis, Inc. 533.39 Mn 15.36 1.00 10.35 Mn
2 ACCO ACCO BRANDS Corp 461.15 Mn 7.23 0.25 962.30 Mn
3 ACTG Acacia Research Corp 322.33 Mn 66.67 1.14 102.73 Mn
4 EHGO EShallGo Inc. 4.41 Mn -0.41 0.33 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.64 0.61
EV to Cash from Ops. EV/CFO 8.47 5.43
EV to Debt EV to Debt 1.51 14.92
EV to EBIT EV/EBIT 9.69 6.11
EV to EBITDA EV/EBITDA 6.48 4.28
EV to Free Cash Flow [EV/FCF] EV/FCF 9.99 6.43
EV to Market Cap EV to Market Cap 3.16 1.21
EV to Revenue EV/Rev 0.80 0.59
Price to Book Value [P/B] P/B 0.64 0.73
Price to Earnings [P/E] P/E 7.23 22.21
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.49 0.78
Dividend Payout Ratio % Div Payout % (Qtr) 69.80 32.43
Dividend per Basic Share Div per Share (Qtr) 0.30 0.33
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 38.66 24.52
Interest Coverage Int. cover (Qtr) 2.12 -123.65
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -54.33 -6.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -19.12 -27.15
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -17.31
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 159.09 -33,818.48
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 383.11 -93.16
EBIT Growth (1y) % EBIT 1y % (Qtr) 172.15 -2,162.53
EBT Growth (1y) % EBT 1y % (Qtr) 127.30 -2,013.71
EPS Growth (1y) % EPS 1y % (Qtr) 122.75 8.97
FCF Growth (1y) % FCF 1y % (Qtr) -49.43 -27.76
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -10.26 -10.90
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.68 0.73
Cash Payout Ratio Cash Payout (Qtr) 0.25 0.19
Cash Ratio Cash Ratio (Qtr) 0.19 2.08
Current Ratio Curr Ratio (Qtr) 1.68 4.99
Debt to Equity Ratio Debt/Equity (Qtr) 1.49 0.44
Interest Cover Ratio Int Coverage (Qtr) 2.12 -123.65
Times Interest Earned Times Interest Earned (Qtr) 2.12 -123.65
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 11.20 -5.38
EBIT Margin % EBIT Margin % (Qtr) 6.44 -12.49
EBT Margin % EBT Margin % (Qtr) 3.40 -14.33
Gross Margin % Gross Margin % (Qtr) 33.10 29.35
Net Profit Margin % Net Margin % (Qtr) 2.60 -16.23