National Financial Partners Corp. (NYSE:NFP)

CAPS Rating: 5 out of 5

The Company is a distributor of financial services products to individuals and companies. It operates as a bridge between large financial services products manufacturers and its network of independent financial services distributors.

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Player Avatar mrindependent (38.92) Submitted: 2/18/2010 6:35:47 PM : Outperform Start Price: $11.63 NFP Score: +12.88

National Financial Products Corp. is classified as an insurance broker but it also offers wealth management services. Historically, the company has grown through acquisitions. The company tends to target high net worth individuals and entrepreneurial businesses. Not surprisingly, NFP was hit hard by the deep recession starting in 2008. As a result, the company was forced to take massive goodwill charges. Despite all of the bad news I am impressed by the realistic and aggressive response of company management. Corporate staffing has been slashed, acquisitions have nearly been stopped. The company even went so far as to sublease a large portion of its corporate office space. Judging from the last press release, the results have been impressive. Although GAAP earnings per share for the last quarter was only $0.04, the "cash earnings per share" was $0.61- annualized this would be approximately $2.44 per share in cash compared to the $11.73 share price. Considering the market for NFP's services can't get much worse, I don't see much downside risk to this cash stream. On the other hand, there is significant upside if the economy improves. The company's debt load looks sustainable with $131 million in cash and $151 million in accounts receivable, versus $200 million in debt.

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