I've spent some time looking into this & I'm a little confused by the extent of this run-down in price. Are there any bearish people around who can explain it to me?
Ohio is gone and out of 2813 branches 244 are in Ohio. That's almost a 9% haircut. Ok.
But the dividend yield is more than 11% and seems sustainable to me. They've bought back more than 20% of the shares in the past year. Nine-month earnings are already 50 cents. And Q4 is usually a big one. Competitor QCCO has branches in Ohio too and that stock is selling for 9 times earnings.
What are sellers betting on? Is QCCO going to drop to 3 or 4 times earnings too? Are AEA's earnings going to fall to 20 cents a year for the long term? Is every state Ohio now?
Can anyone explain this?
Other stocks with much cheaoer valuations. With a PE=2 and a market cap of just 101 million, AEA is not cheap enough for you? 2009 earnings estimated to be .69. Sorry dude, stocks are cheap, but anyone would be hard pressed to find one this cheap.
I do not view this as a good long term stock. It's a trading stock - with 50+ cent moves within weeks - and the added goody of a 10+% dividend if you have to wait. I just wish I had played this quick-dirty move game with RUTH and F yesterday.
You never know.....there may be some consolidation soon enough. In no way, shape or form is this stock a buy....it is probably heading to 0 over the next year or two, that isn't to say you couldn't have some trading rallies in that time period though.
They will probably tighten up the standards on these new loans products, hopefully cutting their bad loan cost. I think this company is smart enough to make sure a future in Ohio is profitable. Otherwise, they would be closing down there.
With the share buybacks I should be clear, filings report shares outstanding:
Dec 31, 2006: 79.5 million
Dec 31, 2007: 72.9 million (down 8% from y/e 2006)
Sep 30, 2008: 61.1 million (down 23% from y/3 2006)
You can see this on Google Finance if you don't want to wade through the filings: http://finance.google.com/finance?fstype=bi&q=NYSE:AEA