Enpro (NPO) - 8-10% FCF yielder, EV/EBITDA 2-turn cheaper than peers, ~net-cash, skipped over due to unconsolidated subsidiary

Wrote it up a month back. Coming off the 45 day restriction so posting it here.
Stock's up $5 since I wrote it up but thesis is still in-tact. The recent development is an interesting one -- The Future claimants decided to side w/ NPO and they will collectively try to strong-arm current claimants into settlement. Time-line may still be extended, but I feel really good about NPO being in the right here. Given the (1) trucking cycle might be prolonged for another year, (2) refineries maintenance should kick in @ 2H15 given pent-up demand, (3) European auto & industrial exposure on a QE back-drop, and (4) Govy contracts roaring back, I think NPO is on solid fundamental grounds (evident in the last quarterly report) into the eventual settlement and remerger.

Thesis

Once marred by >$1.5 Bn of Asbestos claims, Enpro Industries (NPO) is seeing light at the end of the tunnel: not only does it have a strong case to contain the final exposure below $300 mm vs. $1 Bn+ cited by claimants, but the step it took to bankrupt one of its subsidiaries (GST) optically depressed EBITDA/FCF by 25-40%, makes the stock appear expensive, but is in reality under-levered at roughly net-cash and sporting a 6.5x EV/EBITDA vs. 8-10x peers. With ~$210-220 mm of consolidated EBITDA, NPO sits in a stable niche that allows for strong cash-flow generation, has an event path over the next 2 years to put all asbestos-related issues behind it, and is a good set-up for an activist-induced break-up & sale that should prompt multiples rerating while earning 7-8% FCF yield and having the ability to lever up 1-turn+ retire 20-25% of market cap. $80-90 bull case (35-50% up), $52 bear case (12% down), 3-to-1 risk-reward.

http://www.valueinvestorsclub.com/idea/ENPRO_INDUSTRIES_INC_NPO/136069