US: Payroll data points to further cuts
According to ADP, payroll employment fell in September, and the figure for August was revised lower. Carl Weinberg takes the view that whether this is an accurate statistic or not, people in the markets believe that it signals something! The signal from today’s headline will not be a good one. Remember, perceptions are more important than realities in the financial markets. The ADP private sector payrolls estimate was -32K in September after -3K in August. The August estimate was revised sharply lower to 54K. According to ADP’s estimates, private sector payrolls averaged 22K in Q2 compared to 139K in Q1. Goods-producing payrolls were -3K. Service-producing payrolls were -28K. If supported by the upcoming monthly non-farm payrolls data, Carl says these ADP numbers are likely to increase market participants' expectations for additional Fed rate cuts this year, which should, in turn, weaken the dollar and flatten the yield curve.
Edition: 221
- 03 October, 2025
Fraport (FRA GR) Germany
Industrials
The shares have risen ~30% YTD (+75% 1Y), reaching Insight’s €75 SOTP-based TP. While recent tariff increases and the successful execution of a major capex programme have supported sentiment, the stock now trades at 8.2x 2026E EV/EBITDA (vs. 7.6x LT avg.) and looks overvalued vs. peers. Structural constraints persist, with Frankfurt’s majority state ownership, unionised workforce and insourced ground handling keeping EBITDA margins low. Aviation returns are weak, with NOPAT/RAB averaging just 3.2% in 2010-19 and only 5.4% by 2040E, still 120bps below Insight’s 6.6% WACC. Tariffs are expected to average just +2.0% p.a. through 2050E, despite high Aviation capex (€390m p.a.). With DPS resuming at only €1.0 in 2025E (1.3% yield), Insight has a Sell rating on the stock, preferring ADP (+70% upside), Aena (+55%) and FH Zurich (+55%).
Edition: 218
- 22 August, 2025
Fraport (FRA GR) Germany
Industrials
Near-term tariff rises at Frankfurt are insufficient to close the gap to its Allowed Reg. Return. Robert Crimes sees Aviation Returns (NOPAT/RAB) of only 3.1% in 2024E and 2.9% in 2025E, c.320bps below Insight’s WACC of 6.2%. In addition to insufficient tariff rises, there are 3 key factors to consider: 1) Weak traffic recovery (lowest of EU peers). 2) High wage rises above inflation (Frankfurt staff costs to rise c.€150m (+19%) in 2024-25E). 3) High expansionary capex. Robert has a Sell rating on the stock given the average upside of Insight’s Global Infrastructure coverage is significantly higher at nearly 100%. Buy rated peers include Aena (TP €369), ADP (TP €234) and Flughafen Zurich (TP CHF330).
Edition: 193
- 23 August, 2024
ADP (ADP FP) France
Industrials
GMR's restructuring should be a catalyst for ADP with listing to clarify its market value. Robert Crimes sees 4 benefits: 1) Simplify the shareholder structure as “New GIL” will include all GMR’s pure airport assets. 2) Deleverage GIL’s balance sheet. 3) Provide more visibly of the listed value and liquidity for ADP’s stake in New GIL. 4) Serve as a platform for GMR Airports to capture new growth opportunities in India and globally. ADP shares are down >10% over the last year and are still significantly below their pre-Covid level. Robert believes ADP’s shares are over-discounting concerns over future Paris regulation, slow Chinese pax recovery, higher real bond yields and French elections. ADP is his top airport pick. TP €227 (95% upside).
Edition: 190
- 12 July, 2024
Bear’s Den Idea Forum
The average life-to-date alpha of the ~100 short ideas presented at MYST events over the trailing 12 months is an impressive 22.2% (vs. SPX), with ~80% of the ideas generating positive returns. Their latest event saw participants produce a fascinating collection of idiosyncratic ideas with meaningful potential downside including:
Automatic Data Processing (ADP) - “Obviously mispriced” and trading at all-time highs despite facing a contracting labour market. TP $112 (55% downside).
Canadian Tire Corp (CTC/A CN) - Accounts Receivable “exploding” higher as company “stuffs the channel” to hit revenue targets. TP C$100 (35% downside).
ICU Medical (ICUI) - Misguided Smith Medical acquisition is “a bad deal at a bad time”. TP $100 (35% downside).
Edition: 150
- 09 December, 2022
Insight’s global Infrastructure stocks offer avg. upside of 78%
Industrials
Valuations attractive vs. history on SOTP discount, IRR-Ke, Recurring FCF yield and dividend yield - stock prices over discounting higher real bond yields / credit risk not a concern. Robert Crimes sees significantly higher upside in Europe (+104%) than Asia Pacific (+44%) and South America (+11%). Highest weighted average upside for Towers (+121%), where Robert prefers Cellnex (+143%). Second highest upside in Contractors (+98%) and Ferrovial (+158%) remains his top pick. Less upside in Airports (+79%) but European Airports (+112%) have strong potential, with Aena, ADP and FH Zurich all offering 85%+ upside.
Edition: 146
- 14 October, 2022