Closing up a penny or two yesterday was a great achievement for the stock on a big, big down day.
This is a "tell" that the stock likely is going MUCH higher.
Essentially, what this means is that those who realize that EZPW is undervalued used the cover of the
market selloff to scoop up as much of the stock as possible at cheaper levels than they otherwise would have been able to buy it.
The claim that they have only enough money for two quarters does not seem to stand up to scrutiny.
The company has continued to generate positive cash from operations every year.
Last year they paid $600,000 apparently to bailey to go away. They also had expenses related to the accounting issues, and start-up expenses related to the extraction plant of $400K.
Altogether that's $1.2 million. If you back that out and back out the deferred tax allowance, they did not lose money last year.
With the extraction plant and related warehouse and production facility completed, they will begin throwing off greater depreciation expense, which benefits cash flow.
Now, they do have a $600,000 short-term bank loan due on December 3, 2016, so that is the key issue to look toward.
The onus is on the company to demonstrate that it can be a real business.
Frankly, with an equity market capitalization of $28 million at present, someone like GNC should just scoop them up.
I disagree. Many companies aspire to annual dividend increases.
Annual dividend increases represent a part of the formula by which investors value a company.
The company's management and board must decide what trade-off between growth and dividend income they think is optimal. Clearly, no dividend growth is not optimal.
Definitive numbers are impossible without intense number crunching due to the writedowns, charges, and other "non-recurring" items reported in recent reporting periods, combined with the "hybrid" nature of the company's financial statements (a combination of a financial company/lender and a retailer).
I think the company has the ability to generate $100 million of "free cash flow" annually, and think that it should trade at an equity market capitalization of no less than 10x that amount after disposing of GF. That equates to a $1 billion equity market cap compared to just under $400 milliion at the (very happy to see) price of $7.30/share.
Thus, a 150% increase from $7.30 is possible, meaning a possible price of up to $17/share.
Given my position size, I will probably have to start selling in dribs and drabs when we get to the $9 area (though I could theoretically protect my position with put options or covered calls).
Perhaps more to the point is that much of the debt is on the balance sheet of GF and is consolidated on EZPW's balance sheet despite the fact that it is not guaranteed by EZPW.
Thus, we should view the sale price of GF as a combination of Cash n of cash recieved PLUS debt assumed by the buyer.
Of note, some of the GF is cross-deefaulted tro the EXPW convertible notes.
For the record the $230 million of these notes have a 2.125% coupon, mature on 6/15/2019, convert into equity at a price of $16.065/share, and currently trade at about $85 (per $100 of face value) up from under $60 in early March.
Fundamentals tell us the destination.
Technicals show us us the route being taken and the timing.
Integrating both is critical to a trader.
An investor can rely on fundamentals.
Speaking of fundamentals:
I would measure relative value using a combination of
Enterprise Value / EBITDA and
Free Cash Flow / Equity Market Cap
with the latter calculation taking into account the degree to which
FCF is depressed by investment in growth projects.
When I look at the T&S, i see huge numbers of 100 shares trades and relatively few trades of 500 or 1,000 shares.
For a $6 stock, this is puzzling to me.
Is this because the vast majority of the trades are being done by "algobots?"
I can't think of any other explanation of it.
The S&P 500 pullback has reached the 50-day moving average.
it's a start.
The 400 day MA is at 2046, about 30 points below this level.
$6.40 was significant support.
On the 30-minute candlestick, it supported pullbacks on 5/26 and 6/1.
We've broken below that now: 6.36.
The overall market is vulnerable from Brexit stuff.
I do not expect a dividend increase to be in effect until next year.
There still remain a number of asset sales and issues to be resolved ahead of a dividend increase, in my view.
What do investors expect in terms of the pace of dividend increase going forward?
The closing trade was a block of 35,767 shares at $6.69 marked as "Market Center Closing Trade, Cross Trade, Rule 611 Trade-through-exemption.
yes, the golden cross was yesterday on my charts.
Nice to see a pop on that event.
However, when I have (randomly) looked through charts for golden crosses (and their death cross breatheren), I have noticed 2 things
1) They always come after a significant rally...........and
2) They are frequently followed by a significant counter-trend move.