Vivint Smart Home (VVNT), mcap=$1.2bn, price $5.92 vs $5.36

Pitch: The 2nd largest player in the US residential security / smart home market behind ADT. Expected to increase FCF 3x by 2026. Fully vertically integrated subs-based business model. 48% owned by BX. Partially a bullish bet on the whole industry which is in the early stages of smart home penetration – security penetration stuck at c. 20% for years. VVNT has a long runway to grow alongside competitors with the opportunity to deploy capital at mid-20 % returns. Somewhat orphaned stock due to low float, niche industry, and complex accounting.

Valuation: VVNT is expected to triple levered FCF to $225m by 2026 vs $70m guidance for 2022. This $1/share in FCF at 12x + $3/share of excess cash results in $15 target.

Exp. gain: +200% to $15/share by 2026.

Full VVNT  write-up (free guest account required):

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