RE: From Dec RNS6 Feb 2020 21:03
Yes it has a pile of debt, as do many other companies. The difference here is despite the m/cap being relatively cheap when looking at forecast earnings, the debt itself is the big elephant in the room. The company is trending in the right direction, insurance arm performing well with suitable growth, investment in tech/partnerships which should pay dividends. To aggressively tackle the mountain of debt is what is needed - cost cutting, increase in FCF and stopping the dividends. The AA also need to supplement this with growth by using the brand, which is still strong. All is not lost, but it will be an immense challenge. If they succeed, then we will see a significant re-rating, until then is see the 40-60p range as fair value.