Jeffrey Smith Outlines How This Activist Target Can Turn Itself Around

Up by 21% so far this year, Brink’s Company (NYSE:BCO) ended yesterday’s trading session at $29.70 per share, thus registering a market cap of $1.39 billion. The company pays investors an annual dividend of $0.40, which represents a modest yield of 1.40%. For the three months ending June 30, 2015, Brink’s posted revenues of $760 million, down by 11.5% year-over-year, and earnings of $0.19 per share. Wall Street expects third quarter results to improve, eyeing earnings of $0.38 per share on the back of $762 million in revenues. The company today announced a revision of its forward guidance, reducing its 2015 full-year earnings estimate to a range of $1.40-to-$1.50 per share, from the previous range of $1.55-to-$1.75 per share, while revenue expectations remain unchanged at $3 billion. Brink’s’ management has also revised their 2016 full-year guidance, now expecting earnings to vary between $2.00 and $2.20 per share, while revenue estimates were reduced to $3 billion from $3.4 billion. The company is citing economic weakness in Brazil and volatility in the currency markets as a basis for the revision.

Hedge fund sentiment towards Brink’s Company significantly improved during the second quarter, with the number of funds holding long positions at the end of June increasing to 23, from 15 at the end of the first quarter. The aggregate value of their combined holdings stood at $486 million, up by 21% during the quarter. Matt Sirovich and Jeremy Mindich, the managers of Scopia Capital, are also bullish on the stock, having boosted their stake by 10% to amass 3.98 million shares by the end of June. Mario Gabelli, on the other hand, chose to reduce his exposure to Brink’s Company by 5%, leaving his fund, GAMCO Investors, with 2.73 million shares, according to its latest 13F filing.

Disclosure: none.