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Career Education Corp. Message Board

  • sm20505 sm20505 Oct 13, 2012 9:32 PM Flag

    CECO cash 5.51/share, book value 10.51/share

    CEO said that 2012 is in transition year. They will become profitable soon.

    Sentiment: Strong Buy

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    • They have cash now but they are burning cash with poor operating performance and they have over $700 million in operating lease obligations. Those don't go away just because they closed some schools. Be careful here.

    • I don't understand how S&P keeps re-iterating a sell rating with a $2.50 target. How can a company be only valued at half it's net cash position? It's not an economic possibility unless the currency is in risk of being de-valued by half. But we are talking about US$, not Nigerian currency. Maybe if they burn through cash and if there is no scope in for-profit education going forward, it should be valued there eventually but the minimum value at any one instant should be the net cash value and then climbing or dropping with how the company performs. This is very perplexing. I got out on the last run to $4. But am very tempted to get back for the reasons mentioned above. Only thing holding me back is that earnings is on Nov 8 and is expected to be terrible. In this irrational market, MMs could use that as an excuse to take it to the $2s. It's a dilemma....

      • 3 Replies to betasplen1
      • There are currently 1,984 publicly traded companies trading for less than book value. I think it's safe to assume that many of those are also trading for below cash/share. I think the hope here is that one of their largest shareholders (Blum) also has a large position in ITT. Perhaps there's a way to combine the two entities, remove G&A redundancies and rationalize the asset base. The overall outlook for the for-profit post secondary didn't get any better with the continuation of the Obama administration.

      • these analysts r thieves.

      • Many, Many stocks have traded under their cash levels. Some still do.

        I think you might not realize that half of that cash may be owed for obligations that are not debt. Light bill, insurance bill, payroll, taxes, advertising expenses & so on.

        CECO would not be able to take that $5/share in cash and pay it out. They've got to take care of some current obligations with it.

        As to book value. Some of that may be intangibles & goodwill. Intangibles & goodwill usually brings almost nothing in a bankruptcy/winding down of the business.

        Another problem with CECO's book, is how much are used chairs worth? $.10 on the dollar? Maybe less? How much is a 3 year old Dell server worth? Used books? I suspect a lot of the physical assets would be worth SIGNIFICANTLY less than what they are being carried for on the books.

        Also, the street may realize that CECO is going to fight to the last man standing. In doing so, they might burn through all their cash, and there will be nothing left.

        This might not happen, I'm just giving you an example of why CECO is trading for such depressed levels. If CECO can turn it's business around AND they don't get shut down by the government, OR sued into bankruptcy, this could be a TREMENDOUS BUY.

        Whatever it is, it is no sure thing!

        I had to learn this the hard way on other stocks...

    • Quite few for-education stocks are in uptrend now such as CECO, COCO, DV, etc. As manufacturing jobs are back to the USA, companies need more highly skillful workers. Growth will return to those schools next year. Technical tradings will be in high demand.

      Sentiment: Strong Buy

      • 1 Reply to sm20505
      • Such a deal for the share repurchase program. The stock has been under 4.00 for most of the past quarter. It will be very interesting this earnings report. There is a possibility that they bought early in the quarter and did not include those figures in last earnings report as they have in the past.

        Could be buying back these first few days of the present quarter and not report that either as it in not relevant to the up coming report.


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