ARRS

ARRIS Group Inc

TMT


Presented:07/12/2016
Price:$24.56
Cap:$4.71B
Current Price:no data
Cap:no data

Presented

Date07/12/2016
Price$24.56
Market Cap$4.71B
Ent Value$6.10B
P/E RatioN/A
Book Value$15.10
Div Yield0%
Shares O/S191.74M
Ave Daily Vol1,997,026
Short Int11.81%

Current

Priceno data
Market Capno data
ARRIS International Plc engages in entertainment and communications technology. It combines hardware, software, and services across the cloud, network, and home to power television and Internet for millions of people around the globe. The company was founded on April 20, 2015 and is headquartered in Suwanee, GA.

Publicly traded companies mentioned herein: ARRIS International PLC (ARRS), AT&T Inc (T), Charter Communications Inc (CHTR), Comcast Corporation (CMCSA)

Highlights

The presenter characterized ARRIS International (ARRS) as a company running a business (set top boxes) that “people love to hate”. However, he is long the stock and sees the company at an inflection point; at the present level ($24 - $25) the risk/ reward is favorable. Bears on ARRS say the set top box is going away in the long-run, and cite challenges with spending on Customer Premises Equipment (CPE) as a result of M&A within the company’s customer base as a headwind. In addition, the Federal Communications Commission (FCC) wants to regulate the set top box industry, and that has created further uncertainty. The overhangs have led to shares of ARRS trading at “an incredible discount” to peers in similar categories (i.e., 8x forward estimates versus 10x - 12x), and the market is seemingly ignoring multiple positive catalysts, including: the potential for synergies from the Pace acquisition to exceed expectations; a favorable mix shift within CPE and the pro forma scale of the business; favorable trends in the Network and Cloud segment; and one of ARRS’ largest customers likely taking equity stake via warrants with incentives. If his estimates prove to be accurate and the multiple expands, shares could trade at $35 (10x $3.50 of EPS in 2017) within the next 12 - 18 months.

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Idea Discussion

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