I spoke with investor relations at HYH yesterday. They were nice enough to return my phone call. I was confused myself so I called to see. In the presentation you posted normalized net income is listed at $154.6 million for FY 2013. Based on 46.5 million shares outstanding EPS would be 3.32 per share. At current level of 35.82 the PE ratio would be 10.78.
She was not allowed to give me any guidance but Morgan Stanley does have an EPS estimate for next year around $2.80 which includes about 80% of the spin off costs. When you strip those out, if this company can use the free cash flow and grow the business etc you can easily see how they can get to $5 in earnings power. Put a 12 multiple on that and you get to $60 pretty easily over next few years.
A deal is not going to happen. I'm long MDLZ at $25s but took the opportunity to sell some covered calls against my position at $30 for June expiration. The market cap is $53 billion. Company is too large for Pepsi to do that kind of take over without adding more debt, which they clearly stated they did not want to do. Remember Heinz was $21 billion and that was one of the largest food deals in this sector ever. MDLZ is 2.5x the size and a buy out would have to be alot higher premium for the board of directors to agree to sell. Unless MDLZ spins off some more brands like possibly Cadbury etc which I don't think they would do there would be a deal. MDLZ is fine as a stand alone.
I'm long a very small amount at 51.05 from the day it pulled back 16-18%. Right now its a 2% positionin my portfolio. I might double down today. Here's something interesting to look at. Coach made $623,370,000 in net income in 2009 which was the worst recession in 75 years. At the time they had 323,700,000 shares outstanding so they earned approx 1.93 per share. Currently they have 280,800,000 shares outstanding. So if they only make what they did in 2009, this stock is trading at 21x recessionary earnings. at 2.22 EPS. Just something to think about. The company is still growing and buying back stock but that's just a sense of what the multiple could look like should earnings disappear. Happens quick in retail. Which is why I am so hesitant to add here.
At $42 based on current year earnings of $3.05 would be 13.77x multiple with approx 3.5% div yield. This market is nuts. You sort of scratch your head when you see Heinz getting taken out at 20x earnings. Not exactly a growth company.
Trading at 11.43x 2014 forward earnings. Might have to think about buying some here. They only missed by 5 cents and didn't slash prices. Plus margins held around 72%
If you really wanted to short, I'd probably go with the April 2013 $55 puts at 6.60/6.70 vs current stock of 49.50.
Yeah ok good luck with that. At $50 the current fiscal year earnings for 2013 is $3.43 shr. Now that we are into 2013, people start looking at the forward earnings for fiscal 2014. They could easily do $4.00 a share in earnings in 2014. That puts the forward PE multiple at 12.5x. Its probably fairly valued right at $50. If the market puts a forward multiple of 14x on it you could see it top out at $56. This company still made $2.00 a share during the worst recession in 75 years. Different era. People still spend money. Everytime I go out to the malls, parks etc I keep saying #$%$ we are in a recession why is it so crowded. Then it hit me. While 10% of the people are suffering, the 90% don't give a rats #$%$.
At $15 I'd probably jump in and go long. In 2009 during the recession they made $1,143,000,000 in net income. Since then the share count has gone down to 1,038,000,000. So on a comparatable basis $1.10 per share, At $15 CSX would be trading at 13.63X trough earnings. Seems like a fair entry point.
Hard to pin point the daily moves in this crazy market. There will always be some degree of uncertainty in the market. Death of the PC, slowing economy etc. MSFT is now a low growth, dividend value play. Its been the same story since 2009 although revenues have gone from $58 billion to $80 billion. Go figure. Under $25 this is probably a really good value. The $25/20 bullish put spread for Jan 2014 looks like an interesting play.
I didn't get assigned so I get the dividend plus have the downside protection. If I make it through the Jan ex date before gettting assigned in april the profit will be 2 div payments and a small realized gain for an all in return of 2.2% in six months or 4.4% annualized. Seems like alot of work for only 4.4%. This backs my other strategy that if you want to capture the dividend of 0.56 per qtr you are better off selling deep out of the money puts.
Not sure if this will work but we'll see. Tomorrow is the ex div date 0.562 cents. I bought 100 shares at 68.97 and then shorted 1 April $65 call for 4.60. I only did 100 shares to experiment. I wonder if I will get assigned before the close today which would be $65+4.60 = $69.60 sales price. Wouldn't the person holding the call exercise so they can get the dividend? Also if they don't and I hold over night I will get the dividend. But the stock should drop by the ex div amount and the call should drop as well to offset. I guess the real risk is if I have to hold until April. As long as it stays above $65 I will collect the div's until I eventually get assigned. Under $65 I am a buyer anyway.
The same idiots telling you to sell at the bottom will be telling you to buy next year at $15. Do your own homework and invest what you can afford to lose. Yesterday I bought Jan 2014 $8 calls at $3.81 which seems like the best risk/reward way to play long term. Assuming they grow low single digits (2%) 2013 earnings will be around 1.40 per share, a forward PE of around 8. I went back and looked at all there financials since they went public on 4/1/1989 and you know what? They have never lost money. Profitable every year. Company doesn't have much debt. And at some point companies like Amazon will have to raise prices to become profitable or they will not exist anymore.
I made the mistake of only buying 100 shares at 16.99 (cost basis of 17.0795 after commission). Was planning on buying a 100 or so each day until I had 1,000. Now its trading over book value so I'm not as excited.
I mean 28 sounds great but if we are going through this next 4-5 yr cycle, they can add 15B per year to equity even with paying out a div and doing their cap ex etc. That puts their book value at around 115B which is where the market cap is now. If this should trade at 3x book in good times, you have a $60 stock in about 5 years.
Cash & Short Term Investments 16.2B
Total Assets 55B and 42B in Equity
Essentially no debt 2B in convert bonds o/s.
Operating cash flow 12+b vs 3+ billion in dividend.
I wonder if they would consider a special dividend?
Otellini seemed pretty upbeat on the last conf call. Just hope they don't do some undisciplined takeover.
This stock is so undervalued its ridiculous. A tech stock with a 3% yield, forward PE of 10+ and a double digit growth rate. This stock should and will be over $30 in the next 12 months once the market recognizes this.
I bought about a month ago for 24.86. I sold all my shares yesterday at 26.09 and bought the equivalent april 26 calls for 22 cents. My strategy was to give up the div income in hopes of getting the stock back in the low 25's. If we surge I get all the upside from now until Apr17th. My situation Div Income is bad income because its taxable. I still have a loss carryforward from 2008/2009 so the capital gains get wiped to zero.
I was thinking about that. The Bid Ask was so wide today. 1.23 to 1.45. If the stock comes in a bit I will probably do the same.
These guys don't know their ass from their elbow. They said sell Intel at 19. That's when I knew to buy in. Glad INTC is working out. Sell a stock with under a 10 multiple and a 12% growth rate and 3%+ Div Yield? These guys are on crack. I got some exposure to AA today. Shorted some Jan 2012 $15 Puts and Bought Jan 2012 $10 Puts for a net premium of about $2.20. May buy some actual shares next week.