Is it time to revisit 7-Eleven (TYO: 3382)?
After the failed buyout bid from Canadian operator Alimentation Couche-Tard, Seven & i Holdings stock dropped roughly 20%. Is it time to buy the dip?
Please note: This article is for informational purposes only and does not constitute investment advice. The mention of specific stocks is not a recommendation to buy or sell any securities. The author may hold positions in the equities discussed. Investing carries inherent risks, and you should always conduct your own due diligence before making any financial decisions.
I recently wrote an article stating that Seven & i Holdings (7-Eleven’s parent company name) was one of the most likely buyout candidates in Japan. I must reiterate that nobody should ever buy a stock based purely on its buyout potential. If anyone can actually purchase this bloated conglomerate, it will likely be a Japanese company, as we just saw exactly what happens when a foreign entity attempts a hostile takeover.
The stock got hammered by the failed Couche-Tard takeover bid, and is now trading around the 1,900 yen mark, or a drop of about 23% from their buyout-fueled peaks.
If you ignore this M&A drama, Seven & i is basically a highly profitable Japanese convenience store chain tied to a struggling North American business. The fundamentals look really good, and it is definitely undervalued on today’s earnings, but is the future rosy enough to make this stock a buy?
Executive Summary
Following the format of a Mizuho Securities Equity Research Executive Summary, here is the reality of the situation (please tell me if you enjoy it or not):
