For 9 months.....including non-cash expenses such
as depreciation...what Opco and PZN would look like
Opco had a loss of ($84mm), PZN had net of
169mm...totaled that's $85mm net or appx. $.71/share.
lets pay UNcle sugar out of that too. What 40%? That
leaves a net of $.41 a share or a P/E or 22
Not to make things worst but Opco in the 3rd quarter
had a loss of $32mm or $128MM annualized...that's
means combined PZN/Opco would have earnings of
$41mm...take out $17mm for taxes and that's $24mm for the
combined organization or apprx. $.20/share for a P/E of
45. Ouch. So de-REIT might get them only $24mm of
retained earnings plus the non-cash items. Short term
would be rough it appears to me.
If we assume an SI would want lots of
equity...who wouldn't.....lets try this, dilution. In order to
shore up the balance sheet lets assume dilution of 20mm
new shares. The numbers with Opco's loses annualized
are now $.17/share for a P/E of 53 ($24mm/139mm
Not seeing what's happening at Opco is killing this
company. Even with capacity stated near 90% we obviously
are not getting the full effect of what really is
happening there, IMO. Any ideas?
It seems that you are calculating by combining
9-month numbers and annual projections in the same
breath. Subtracting OPCO's 12 mo. losses from PZN's 9 mo.
earnings, etc. Calculating P/E based on 9 mo. figures.
That, or else I got lost in your analysis completely.
9 months...Opco annualized from the 3rd quarter
number of $32mm loss equal loss of $128mm. PZN
annualized would be $225mm for combined of $97mm or $.81
combined ($97mm/119mm)....with a 40% tax bracket woulld
give them net earnings of $.48/shares or 19
Annualizing Opco from the full year so
far...loss$84mm...would give Opco a yearly loss of $112M or combined
income of $113m($225PZN -112Opco) or $.94 non
taxed.....$.56 fully taxed or P/E of 16.
Just got his report....from First Union.
estimates combined Opco and PZN would earn $.49 in 00' and
$1 in 01. His discount of future earnings puts the
stock at a level of $7-$8 per share, but based on
EBIT...$7-$10...if I wrote this all down correctly.
Interesting how we were just going through this exercise.
Any chance of getting his break down of numbers?
I would sure like to see how he comes up with the
If this is true then whether we stay
a REIT or convert to a c corp we are going to be
stuck with a stock price under $10 for awile.
as people have been trying to guess what earnings
combined co would have...what number of shares are you
using for the combined companies....opoc is in an
interesting position they have the clients and ownership is
very differnt than pzn...certainly they would be
for you and everyone else who has tried to
mathematically explain this turkey in which we have all
invested. As a person whose life is devoted to science,
even I can say that the complexities of this beast are
nauseating in the least. The bottom line as I see it is that
this entire reit experience has been a lesson in the
shell game of fancy accounting, tax evasion, and
mismanagement. However, feel not alone. Almost everyone who has
invested in any reit is feeling these same pains as the
word has been out for months that managers of most
reits can not be trusted. Our management is just
particularly laughable, clueless, and dishonest. At the next
shareholder meeting, we shouldn't decide about converting to
a C corporation (won't make a difference - see HOT)
- rather we should vote for a new management team
devoid of nepotism - perhaps headed by someone who
really knows real-estate like Mort Zuckerman of Boston
His assumptions include:
- $300 million
from the SI at $10 per share.
- $410 million in
completed projects in 2000, $310 million in 2001.
all fees, chargebacks, etc. eliminated.
rate of 35%.
- no assumption is given on
As Flipper says, he arrives at $0.49 EPS for 2000,
$1.05 for 2001, and EBITDA for 2000 of
Based on this he gets an $8.5 target based on EPS using
a 40% discount to a market P/E of 29, and a $7 to
$10 target based on a 25% discount to similar
companies which sell at 5 to 7 times
Flipper: my number for Q3 of 1998 was after-tax. I took
CCA's net income (obviously after-tax) of $21.1 mm and
added PZN's income of $6.4 million assuming a 40% tax
rate. That gives you $27.5 million total times 4
divided by 118 mm current shares equals $0.93 per share
This raises a disturbing question. If the combined
entities could earn $110 million on an annualized basis
pre-merger with the number of beds it had then, how it could
now earn $77 million (Haley's number for 2000) with
significantly more beds. I realize the company has taken on
debt to pay dividends which lowers the profitability
of the enterprise, but it doesn't seem like they
have been doing that in the magnitude implied by these
PZN had operating income of $147 mil + earning of
subs of $22.1 for Income Before Taxes = $169.1mil.
(This does not include the $80 mil charge for reit
conversion). CCA had Pretax operating loss of $138.4 mil. The
two companies combined had Pretax Income of $30.7
mil. CCA has the benefical effect of a tax loss booked
at $54 mil. When you add $30.7mil + 54 mil you get
Net Income of $84.7 mil. If you use 116 million
shares that is Net Income of $.73 per share. BUT the
benefical effect of the tax loss is held in new CCA which
has never made a dime. So $.46 of the $.73 may not
ever be realized unless New CCA become profitable
(LOWER LEASE RATES). The operating income of the
combined entities pretax is $.27 cents. This is why PZN
stock is valued below $10.