The Recent Pullback In Brink's Is A Gift, According To Buckingham

Shares of Brink's Company BCO, a security and protection services company, had a stellar run in 2017, adding 91 percent, although they've underperformed the broader market in 2018.

Compared to S&P 500's 1 percent drop in the year-to-date period, Brink's has shed about 9 percent, with one analyst seeing the recent pullback as a gift.

The Analyst

Analyst James Clement initiated coverage of Brink's with a Buy rating and a $100 price target. The analyst also named the company as his top industrial/commercial services pick.

The Thesis

Brink's new management, which took over in the second half of 2016, launched a three-year profit improvement plan to maximize growth in the already-successful emerging markets, while also narrowing margin gap with competitors in more-mature markets, Clement said in a Tuesday note.

The analyst expects the company to exit 2019, with a 10 percent EBIT margin in its historically-lagging U.S. operations.

Clement said Brink's is an underrated top-line story, with a 50-50 split between flat markets such as the U.S., Canada and Western Europe, and emerging markets. The analyst estimates the company's emerging markets to grow in excess of 10 percent annually, on an organic basis, leading to consolidated organic growth of 10 percent.