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Doral Financial Corp. Message Board

  • speculator_311 speculator_311 Aug 22, 2005 3:08 PM Flag

    DRL trading below book value!

    I just did some number crunching, base on the net tangible asset reported of $1.972 billion and write down of the strip value by $435 billion, its tangible asset value of the company should be at least $1.538 billion assuming earnings of zero this quarter. That's roughly $14.23 per share. So when you buy the company, you essencially gets $14.23 worth of assets + upcoming earnings (estimated 45 cents this quarter, I believe it is achievable base on revenue guidance), and as much as $2.05 earnings in 2006 all for $14.03 only! Failure of DRL to poop on its pant again in the upcoming earnings announcement could easily result in a 20% spike in price, time to nibble some more.

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    • sorry, you have to subtract the preferred stock out of the bokk value.

    • You are incorrect.

      There is a significant amount of the shareholder equity that applies only to the preferred stock.

      The real book value would be around $9 with a $435 million reinstatement applied only to common shareholder equity.

      • 1 Reply to ss_scott03
      • The restated 12/31/04 Book Value will be around $9 (barring additional dropping shoes).

        But as of today 8/22/05 it's probably at least $10 due to 2005 YTD profits.

        I would argue that the restated Book Value will be very conservative. Reason -- the restated IO valuation will be based on forward rates, which historically have not been good predictors of future short term interest rates. They have historically overestimated future short term interest rates by a wide margin. So unless the restatement method somehow adjusts for this (I doubt it), higher Price/Book Value multiples should be justified going forward.

0.720.00(0.00%)Feb 27 3:27 PMEST