They are clearly thinking that gold will go much higher - and if they are right then this deal is going to look pretty sweet. If they are wrong then they will still recapture their investment with an income stream to boot.
Do you know who writes SA articles? Pretty much anybody who wants to. It's really not much different than posting on a message board.
Not saying you are wrong or the numbers you stated are wrong - but if SLW said they are expecting 11 percent out of it then I am doubting they made those numbers up.
Just stating that about SA because of another stock I was following where it was being pumped in a hard way through SA articles. A lot of investors gave them way too much credibility and got hammered when it became obvious that 90 percent of what was in the SA articles were amateurish BS and way off the mark.
It looks to me like a lot of people are determined to spin this in this most negative light possible - and are almost desperate to do so. Honestly, I'm not trying to spin it either way - just trying to look at some numbers. When I looked at it yesterday I wasn't that crazy about it - but after further analysis I'm starting to think this might actually be a good deal. Feel free to explain why I am wrong. No hard feelings. Just trying to analyze the deal.
In rough numbers it looks like the company will basically issue 10 percent more shares than what is on the market for what will be in return roughly a 10 percent increase in revenue. If that's the case, then it would seem that a 10 percent increase in revenue would have a very significant impact on the bottom line (and therefore the dividend) as they would not be increasing their expenses by a corresponding amount. For most businesses, once you reach a certain level of revenue anything above that is either all profit or mostly profit as all of the fixed costs have already been covered. Given that, it looks like this deal could have a significant positive impact on earnings and dividends and will look like a great deal shortly down the road. In fact, if they can do this again then they should.
Also, the roughly 10 percent increase in revenues is based on current gold prices. If gold goes to $1600 an ounce then they will be making 50 percent more on this deal. If it goes to $2000 then they will be making double what they are making at $1200. Even at $1200 this looks like a good deal. At anything above that it gets phenomenally better.
Just my opinion.
If you read the report it sounds more like an upgrade even though it was moved from a buy to a hold. Stock looks cheap here but I will sit this one out. I'm thinking the Nissan trucks coming out later this year could be a catalyst to get this one moving higher.
Without that they would have SIGNIFICANTLY blown out the quarter. There is NO WAY that loan loss provisions should be 43 percent higher than last year. If that were a realistic number then the entire economy would be in the tank in an almost unimaginable way.
DFS should be 100+ but they need someone like Icahn to come in and show them how to unlock the value already sitting in the company. The stock trades at a PE of 11 whereas most of their competitors are double that.
estimates were for 1.52. What's stupid is estimates were for 1.43 until 90 days ago when they raised guidance. If they had not raised guidance then this would have beat estimates plus been up significantly from last year so it would have been great news. The company is growing like crazy and is priced below where it should be - just needs to keep expectations going forward more modest so the numbers are easier to beat.
Still, growing earnings per share at 17 percent year over year in a tough economy so anyone who wants to panic and sell will regret it later. The economy won't be tough forever. I will continue to add.
Makes no sense. This stock should be in the 70s.
and the stock price is already absurdly low. Anyone selling based on a Stifel downgrade deserves the pain they will soon feel when this stock is over 100. Just look at the history.
This stock is selling at a forward PE of less than 10 on current estimates - and history has shown that those estimates have always been SIGNIFICANTLY too low - so it is probably realistically trading at a forward PE of about 7. The valuation on this company is currently insane - but it won't be forever.
If you play value stocks much then you know that they tend to sit and creep up a little then drop and then repeat the cycle until they explode - and then they double or triple or just climb out of sight once they become a popular pick. This is a value stock and a growth stock as well - and recently became a dividend stock too.
Keep selling - and I will keep buying. The time to be brave is when others are fearful.
- Sales of $4.5 billion, up 4% from a year ago; 12% growth excluding impact of foreign exchange
- Best ever quarterly core operating earnings of $294 million, up 21%
- Adjusted earnings per share of $2.28, up 24%
- Company operating margin of 6.5%, up from 5.6% a year ago
- Improved margins in both business segments
- Completed acquisition of Eagle Ottawa
- Increased quarterly cash dividend by 25%
- Increased share repurchase authorization to $1 billion
- Returned $134 million to shareholders through share repurchases and dividends
- Lear credit ratings outlook upgraded to positive by Standard & Poor's
However - an analyst predicted revenues would be 4.56 billion and they came in at 4.52 billion (what's that? 15 minutes worth of revenues? shocking) so the shorts and options players try to get everyone focused on that instead of the true story with this company. Note that revenues are still HIGHER than last year. Amazing how some of these articles get spun.
It is truly amazing that these analysts can stick whatever absurd number they want on earnings or revenues and regardless of how a company performs the story becomes how they perform in relation to whatever the analyst threw out there. If EVERY part of the business is doing MUCH better then who cares what the analyst said?! That guy may sit in a bar all day and be a complete failure at his job and little or nothing to base his estimates on but somehow his estimate becomes the story instead of the company's performance.
That's the math I came up with too - but that also assumes $1200 gold. If gold hits $1500+ then this deal starts to get really attractive. If it goes higher than that then it gets extremely attractive. Even at $1200 it's not just terrible - just not great.
I think the last time they moved it to a hold it was at $41 per share and then they moved it back to a buy at $61. Hopefully they will be similarly accurate this time and we will see another 50 percent run.
I'm not going anywhere. The company is growing revenues, profits, and dividends at too rapid of a pace for me to bail out over an analyst recommendation. Just saw WYN drop 4 bucks on an analyst downgrade right before jumping $14 the following couple of weeks. That all happened just within February.
Anybody who sells on an analyst downgrade either needs to have followed that analyst for years and be extremely confident in them or they never should have been in the market to begin with as they are too easily manipulated.