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Advanced Emissions Solutions, Inc. Message Board

  • rentierparasite rentierparasite Nov 17, 2013 8:01 PM Flag

    Fully Valued?

    Hi, guys --

    So, _really_ roughly:

    -- Per management, all plants will be "in operation" by YE 2014. Note that's "in operation", not "sold", and that there's been some, ahh, slippage from past management forecasts.
    -- So call RC $10/share from 2015 through 2020. That's $50.
    -- There's of course more to the company than RC. But it looks like RC is pretty fully in the price.

    I of course understand that if ADES is putting out, say, $3-$4 in quarterly EPS in 2015, and the markets stay frothy, the stock is going a lot higher. But what's it worth?

    To forestall the usual attack-the-messenger stuff, I own this but am starting to think about moving to the sidelines.

    Yours,
    RP

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    • Hi RP,
      Figure ADES earns $150 million a year from RC for 8 years. That's $1.2 billion. Just imagine what kind of earnings stream that money can buy. Just on the RC earnings the stock is going to $150. The markets don't need to remain frothy for ADES to zoom because in a down market all the money is looking for top performers.

      FYI, mgmt. plans on keeping the last few RC facilities for their tax credits.

      Anyway, the whole RC focus we have now is going to change once the MATS consumables start ramping up and the company starts spending its RC loot.

      Sentiment: Strong Buy

    • We all ask ourselves the same question regularly. You are correct to question management's ability, I do it regularly (to the annoyance of several on this board).

      However, let me give you the other side of the story, and why I hang in there despite management's missteps:

      1. You have completely discounted MATS. The consumables business could drop another $100-200 million per year in earnings starting in 2017. And there is no sunset provision.
      2. RC runs through 2012/13, so there is a longer cash flow stream there than what you have given them credit for...
      3. The "free call option" is CO2 sequestration/capture. That market dwarfs RC and MATS, in my opinion.

      Sentiment: Strong Buy

 
ADES
16.60-0.22(-1.31%)Feb 27 3:59 PMEST

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