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CPI Corp. Message Board

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  • cranberryboy19 cranberryboy19 Dec 23, 2011 10:23 AM Flag

    Selling volume tells me BK is not just rumor.

    shares are scooped up as fast as they are offered. would you buy shares in a company that is going out? no. buy low sell high. suspend dividend, stock drops, re-instate dividend down the road, and up it goes. just a hunch though.

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    • The company has managed to sustain its dividend thus far by EMPTYING the cash hoard it had built up over 60 YEARS in the business. Cash in February 2007 was $59.2 million. It dropped to 23.7 million in 2008, 18.9 million in 2009, and then FELL nearly 72% to $5.4 million in 2011. The company’s payout ratio (dividends per share / earnings per share) is a staggering 455%.

      To put this in context, many commentators suggest that payout ratios above 50% may be an early warning sign that the company does not see reinvestment opportunities or, if it does, is not giving itself enough cash to pursue those opportunities. CPY realized net operating cash flow of $37.8 million in 2010 but, after dividends were paid, free cash flow was -$32 million. With a current market cap of only $36.7 million and a share price that has fallen 83% over the past year, CPY has a long way to go before it is safe from NYSE delisting.