NN Inc falls into the “balance sheet transformation” theme — they were previously operating as a multi-industry conglomerate (auto supplier, industrial supplier, and healthcare) with high leverage. Then sold the healthcare business at a high multiple to massively delever (6x+ leverage to below 2x) the remaining auto/industrial business where it sits today.
FY21 Valuation — Short-term, NNBR should trade closer to its long-run average EBITDA multiple of 7.5x. On $60m 2020 EBITDA = $450m EV. Backing out $125m net debt and $86m preferred equity nets a $239m market cap. Add in the $10m CARES Act funds for $249m equity value or $5.50 per share — 80%+ upside over the next 12 months.
NN Inc ($NNBR) — Initiation (4/23/21)
NN Inc ($NNBR) — FY21 Update