It is already a buy.
They bought back about 10% of the stock during 16Q1 and now have only about 70 million shares outstanding. Therefore, at $25 the equity market cap is just $1.75 billion.
Yet, last 12 months FCF is more than $325 million.
$325 / $1,775 = 18.5%
You can't get an 18.5% FCF yield practically ANYWHERE.
Yes, there are problems. competition from AMZN is largest among them.
However, I expect that the company's 3-year program to refranchise more than
1,000 company-owned stores, is likely to generate more than $500 million in
proceeds. Add in 3 years of FCF at the $250 million level and the company will be
generating more than $1.25 billion in FCF over 3 years on a $1.75 billion equity
So, unless you think the company's business will completely implode (and that was
not the impression I got from reading the conference call transcript), the stock is a
solid buy here.
All IMHO, FWIW, DYODD
On what basis did you make that valuation conclusion?
Others here and the Hedge Fund manager that published on Seeking Alpha have concluded that $15 is the valuation....
This week the "Rating Outlook" was upgraded to Stable from Negative.
The actual Ba1 rating itself remains the same.
This is the first necessary step for the company to achieve a rating upgrade to IG in order to be able to refinance the February maturity in the unsecured bond market.
it's all part of the plan which is going according to script.
I've been around the block a few times and aside from crystallizing what the value for the underlying business can be in a takeout, I view it as negative, as EZPW will face a larger, tougher competitor with greater economies of scale relative to being a public company.
Speaking of bozos............
Try watching the CNBC special on Costco.
You might learn something.
They sell large packages of stuff to consumers who can afford them and who have the space to store them until they are needed because they are relatively wealthy and have large houses.
As of the end of the conference call, XRX is at $9.75 down $1.42.
The company cut its Cash Flow and Free Cash Flow guidance by $300-$350 million for the year.
However, $200-$250 million of the cut reflects expenses related to the separation, which the company expects to complete by the end of the year (Form 10 expected to be filed in July).
Also, and maybe this is a bigger impact on the stock price, is that the company announced it would not complete and share repurchases in 2016 because the company wants to reduce debt in order to prepare the two separate entities for life on their own.
Anyhow, this selloff is a big over-reaction in my opinion.
The average Costco customer drives a Lexus or an Acura or a BMW and is upper middle class.
Every 10-K lists the amount of debt maturities y year.
The main issue is the large maturity coming up in February 2017.
It would seem the company will be pushing hard both operationally and financially AND with the rating agencies to get to IG before they need to issue to refinance that debt.
Unfortunately, it appears taht moody's is asleep at te wheel as they still have not stabilized the "Outlook negative" they had since last year. They probably should be getting close to "Outlook Positive" but they don't move that quickly.
if they can get the upgrade from S&P, they may have to go to Fitch to seek a rating. If S&P upgrades and Fitch gives tem an IG rating, Moody's keeping a junk rating will be meaningless as the bonds will be included in the Barclay's index of investment grade bonds.
Apparently, the company's filings with the SEC put HERC's EBITDA in the range of $600-$650 million.
That would leave HTZ's EBITDA in the range of $1 billion.
HTZ will substantially reduce corporate debt with the proceeds from the dividend that HERC will upstream coincident with the spin-off (actually the structure of the transaction will likely be a bit more complicated than tha).