I am looking at an investment in Brink's and would like feedback. Also, if I may, I would like to ask a few questions:
I am seing the well known brand name, which I think would fit in nicely with my other business service brands like Cintas and UPS. I can add to my "Business Services Division".
I am looking at the PE ratio of less than 10 and and a stock trading at 3x operating cash flow.
I am looking at cash holdings of about $5 per share.
The Yahoo Finance balance sheet shows the company to have $780MM in other liabilities. Are these liabilities for cash and valuables in Brink's possession? Is this a liability for bonding insurance? Did they keep some of CFL's debt?
While I would applaud management for the spinoff of Brink's Home Security/Broadview and seemingly maximizing the value of this asset, why do you think this company trades at such a high multiple relative to Brink's? Is it because the payments for home security are more stable and take on a utilities/cable tv quality while Brink's is more cyclical? I would have thought the bad housing numbers would have been bad for CFL.
Is BCO a good indirect play on gold? I sold some gold this year for a nice profit and was patting myself on the back at the time, but now regret it. If this administration runs the dollar in the ground, do we seek a boom for BCO in gold shipments?
On an adjusted basis, excluding one-time expenses, BCO trades for ~8.0x adjusted earnings and < 4.0x EBITDA. Very cheap.
While they have $234 million of cash they also have $268 million in short&long-term debt so from valuation perspective I wouldn't conclude they have $5 per share in cash - have to look at "net cash" IMO.
I think BCO has bottomed and is poised to move up....albeit not quickly or in a straight line.
I suspect BCO becomes a rotaion play as money seeks undervalued, brand name companies.
It's hard for me to pigeon hole this company as a pure financial sector company. I think you could argue it is a bit of a consumer discretionary (spending/ATM) play and also a consumer staple play (again ATMs, banks, cash handling).
From the standpointthat it plays into the surge of gold prices I believe it could happen that more and more people around the world may actually seek to take position of the real thing. Inflation, currency devaluation, etc could result in gold hoarding...as well as other precious metals and jewelery.
In India, this may be a bigger play. I'm not suggesting this is Armageddon coming, but over the next few years we could see a real surge in the demand for actual precious metal/stones/asset ownership.
Someone has to be able to handle and deliver it. What better way than a Brink's truck.
I cannot comment on the $780 mil debt. I don't know.
My take is they sold home security to concentrate on their core biz. of security and delivery of cash/assets.
I liked the entry into the Indian market which is what tweeked my interest and purchase of the stock around $26/sh.
I don't see much more fundamental downside for BCO.. Big market sell off will sweep it up as well, but the company appears to be scraping along the bottom of it's historical valuation level.
I like it. I like value stocks. I believe over the next 1-2 years as interest rates eventually rise and the demand for hard assets rises, BCO's services for handling/security/delivery of cash, precious stones/metals and documents (bonds, property deeds, legal instruments, financial documents) will increase. I would like to see BCO in the $30's in '10 and approach $40 and up in 2 years.
BCO, IMHO, is a proxy for inflation, weak dollar, and rising interest rates. If the world really considers going to something other than the dollar as the default currency the scrambling around for "HARD ASSETS" will play right into BCO's hands.