It is a little hard to believe just how bad things got under the now-former leadership of GEA Group (OTCPK:GEAGY)
(G1AG.XE), as the company posted numerous profit warnings and misses
over the last three years, the latest of which (just before new CEO
Stefan Klebert took over) saw an adjusted EBITDA outlook for 2019 almost
20% below the prior sell-side average.
As it stands
today, there's a lot of work that needs doing at GEA Group. From
product design and quality control to a thorough portfolio review, to
cost/efficiency initiatives to IT harmonization, almost everything at
GEA Group needs to be fixed. That's a lot for any management team to
take on, and GEA Group's new management doesn't come in with an
established record of executing in turnaround situations. Fortunately,
expectations are at a point now where I believe even "okay" performance
on a turnaround can drive meaningful upside for patient shareholders.
While there is certainly a risk that things get worse before they get
better, not to mention a risk that they may not get better at all, and
that risk makes the shares unsuitable for less aggressive investors, the
weak sentiment relative to an established market presence in
end-markets with attractive long-term characteristics makes this a name
to consider.
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A Fresh Start For GEA Group, But Old Problems Linger
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