Global credit rating firm Moody's has upped the liquidity
rating of consulting major
The Corporate Executive Board Company
) to Speculative Grade Liquidity-1 (SGL-1) from SGL-2. Notably,
the rating firm has reaffirmed all other ratings with a stable
BUREAU VERITAS (BVRDF): Get Free Report
CORP EXEC BRD (CEB): Free Stock Analysis
INFORMATION SVC (III): Free Stock Analysis
STANTEC INC (STN): Free Stock Analysis Report
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While raising the liquidity rating, Moody's has considered
Corporate Executive Board's expansion in revolver availability,
which had risen to $200 million from $100 million in a re-pricing
transaction. Moody's expects this amount to remain available to
the company over the next four quarters.
Concurrently, Moody's has reaffirmed Corporate Executive Board's
Corporate Family Rating (CFR) at Ba3 and Probability of Default
Rating at B1-PD. Although the financial leverage of the company
is expected to be near 3x in 2014 due to organic revenue growth
and modest debt amortization, Moody's believe that the leverage
will be enough for a reiteration of CFR's rating.
However, Moody's declared that the current rating could be
upgraded if the company reduces its debt to maintain the
financial leverage ratio below 3.5x. At the same time, a
downgrade is possible too if Corporate Executive Board
experiences a decline in either revenues or liquidity with a rise
in debt levels.
Moody's expects the company's current cash and cash equivalents
of $82 million as on Jun 2013, to grow by a minimum amount of $80
million annually through free cash flow generation.
Corporate Executive Board's subscription-based revenue model
appears to be the key driver for its expected growth in free cash
flow. The revenue model suggests that the company has a decent
chance of delivering revenue growth, along with high
profitability margins and low capital spending needs.
Despite the positives, Moody's cautioned that Corporate Executive
Board's business is cyclical in nature and is vulnerable to
Headquartered in Arlington, VA, Corporate Executive Board uses
advanced research methodologies and human capital analytics to
senior leaders to facilitate decision-making. The company's
network is spread across the globe.
Corporate Executive Board currently carries a Zacks Rank #3
(Hold). Some other stocks worth considering include
Information Services Group, Inc.
Bureau Veritas SA
). All of these stocks carry a Zacks Rank #1 (Strong Buy).
(We are reissuing this article to correct a mistake. The
original article, issued Wednesday, Oct 9, 2013, should no longer
be relied upon.)