Value Investing with Sven Carlin, Ph.D. on $GEN (Nov 3, 2026)
GEN is cheap at a P/E of 14 with a 2% dividend and good double-digit recent growth, but the speaker sees a reason: $8 billion of high-interest debt and management's unsustainable debt-funded equal-size acquisitions like the attempted GoDaddy deal, so he doubts ~10% cash flows offset the risk and that management puts shareholders before its own survival.
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We continue our stock-by-stock analysis with Gen Digital. There's a reason why it's cheap. Therefore, a stock that hasn't achieved much in two decades raises some questions. The price-to-earnings ratio is 14, the dividend payout is only 2%, and the business looks good and has recently been growing at a double-digit rate.
They have $ 8 billion in debt at very high interest rates , and that is always a problem. The outlook is there, and the company is still profitable. However, when you look at what management wants to do and how they intend to survive or grow, and then they go out and try to buy GoDaddy, and make crazy acquisitions of companies of equal size, you simply ask yourself if the cash flows that may be available at 10% are sufficient to offset the company’s risk.
Anything is possible, but in my view this is not a sustainable strategy. The company owns the Norton and Avast brands. I remember using it, but that was a long time ago. Some people still use it.
So, there are digital companies from the past that are still around, still operating, and then they try to make acquisitions, taking on more debt, and more risk.
I don't know if this management is just trying to survive rather than trying to create real value for shareholders. Perhaps in these businesses, and we will see this often, management thinks first about its survival and then about the shareholders, and this is not good.
Carl Icahn said long ago that corporate management is the worst disease in American corporate life , and here are some examples where one can begin to question it, I mean management.