RAD EV/EBITDA = 7.75
WAG EV/EBITDA = 11.61
Whose got tunnelvision now????????
Fact: RAD fair value is $7.60 on a WAG comp.
6904 calls vs 695 puts traded today, a very bullish 10:1 and a record 9 days of aggressive call buying adds support to the common.
Regarding SSS comparisons to WAG (and CVS to a lesser extent) some argue 1.9% YOY revenue growth is a pittance to WAG's 4% rise. At face value, it seems like the right argument. However, looking deeper into the numbers - the 1.9% increase in revenue should be overshadowed by the 54%, or 200bp increase in operating margin, from 3.5% to 5.5% YOY.
So the conclusion: RAD trades at a 50% discount vs it's peer WAG on an EV/EBITDA basis as a result of RAD's outstanding P&L execution (FYI, RAD should be $7.6 per share to be an equal to WAG on this most relevant valuation measure).
Finally, while RAD share performance has been remarkable of late, it is in the early inning of a secular recovery for the business. Oh by the way, even SSS comps at plus 1.9% are up 600% from April.
Food for thought.
Sept: Up 1.9%
August: Up 1.1%
July: Up 1.3%
June: Up .7%
May: down 1.5%
April: down 4%
FYI, on all of the reported SSS dates (including the down months of April/May), RAD stock surged and closed up nicely at the end of the reporting day.
Fasten your seatbelts - we have ignition
SSS release dates and %changes for 6 month period were as follows:
Sept 5: Up 1.1%
Aug 1: Up 1.3%
July 3: Up .7%
June 6: down 1.5%
May 2: down 4%
So the trend is clearly on dramatically improving comps. Additionally, RAD PPS closed nicely higher on each of those release dates, including the two down comp months of May 2 and June 6.
Expect a pop on a $5 base for Thursday.....notg a good time to be short.
for almost 10 straight years!!!! Good riddance to those infamous series H convertibles that were just retired with the 40 mil share exchange. Hmmmmm. that exchange saved the company $120 mil over 10 years. I suppose RAD can affford to pay CA on the fine. Freaken Greenpeace lovers, only in Cali.
a) Credit Suisse already paired an institutional investor with these converted shares this morning, so the 40 mil share conversion is NOT an offering (IE no stock for sale).
b) Good riddance to series G and H preferred - with overhead supply gone.
c) Earnings per share and guidance from the company or analyst expectations do not change because of the conversion.
d) CS upgrade on deck.
As most already know, Leonard Green exchanged his 6% Series H convertible preferred stock (acquired in February 2005) yielding a fixed interest payment of approx $11.5 million in annual interest income. These preferred were converted into 40 million common shares on Sept 26, 2013. At face value, it now appears that GEI sees more upside (and conviction) in riding the common to $7+ rather than the $11.5 mil annual income provided by the preferred. Makes sense, eh, $40 million gain if RAD hits $6 and $80 mil at $7, or 4x-8x more profit respectively than the preferred. Interesting to note that the RAD common shares were trading at $3.5-$4 when Green opted for the safe and relatively guaranteed interest payments in 2005, and over the next 8 years - rather than holding the "risky" common.
So GEI effectively buys the common which is a huge vote of confidence. I guess after all, smart money is not just a dumb cliche. Welcome on board, Mr. Green. Please fasten your seatbelt.
P.S. Rite-Aid also benefits from the transaction as the retired series H saves $11.5 mil, or $.012 per share - with no dilution as the preferred conversion was always accounted in earnings reports on a fully diluted basis.
Here is what NASDAQ shows Greens equity ownership in the common (confirmed by the 13F revealed tonight), which increased from 0 shares to 40,000,000 shares in the period June 20 through September 26, 2013:
Home Quotes Ownership & Insider Trades Individual Insiders
Insider Trades of GREEN EQUITY INVESTORS III LP Information
Click on the column header to resort 'ascending (^) or descending (v).
Individual Insider Trades
Company Relation Last Date Tran OwnerType Shares Traded Last Price Shares Held
RITE AID CORP Director 06/20/2013 Acquisition (Non Open Market) indirect 31,250 0 31,250
RITE AID CORP Other 09/26/2013 Buy direct 40,000,000 0 40,000,000
Sierra" of Sierra World Equity = Guy Leitch
Beware of this fraud, sanctioned by the SEC and publisher of numerous bogus merger announcements and many pump and dump schemes. Sierra's been banned by Ihub and most (if not all) stock boards. They have no credibility and their followers have all gotten burned, with few remaining on deck to get burned.
Best advice is to ignore Sierra's thousand stock picks that amount to nothing but huge losses for investors choosing to follow them.
There are currently 6 analysts covering RAD vs 22 covering WAG and CVS.
Why? Because the other 16 analysts don't rate penny stcks (sub $5).
Expect many more to resume or initiate coverage on RAD in the near-term, with Buy or Strong Buy ratings, as RAD still trades at a meager 7.7x ev/ebitda vs its peers. Fair value would be closer to $7.5 on this valuation metric. RAD is poised to climb better than 50% from current levels.
Congrats to all longs and call option holders.
Going much higher.
Loved the part where Carson talks about FMCN and EDU as having a legitimate underlying business model riddled with questionable business practices, whereas NQ Mobile is simply a total fraud.
w_ w_ w _ valuewalk_c o m /2013 /11 /carson-block-nq-mobile/
= the piecemeal transfer of cash from Industrials Bank Co. Ltd to Standard Charter. Fictitious acct statements are hard to undo, and the small deposits to Standard Charter appears to assert that mgt is scrambling to borrow real money in the gray market to fund these new deposit accts. Furthermore, if accounting fraud is exposed on the balance sheet, it is a 100% certainty that the P&L is embellished too. This is unraveling faster than you can count to zero.
Ominous issues persist:
a) What is the true origin of the cash transferred to Standard Charter. Industrial Bank has a history of questionable financing. Was mgt struggling to borrow the piecemeal deposits into Standard Charter? Khan's reasoning behind the small deposit amounts is, "term deposit perspective, as they make sense from a capital management perspective" - makes no sense, a classic baffle with bs story.
b) Is the total NQ software user base inflated by 300%? Mgt is telling investors that they count each user only once, regardless of the number of NQ apps on the phone. The math tells a different story. If you reconcile this assertion to fit the story, mgt would need to count each phone pre-loaded with NQ software as a registered user, and each app installed or pre-loaded on a phone as a unique user - which egregiously inflates the actual user base.
c) Is Yidatong an NQ shell game? The biggest qestion, and if confirmed (and the evidence looks overwhelming), NQ revenues are likely inflated by 70%. Enron's cronies that caused ENE stock to go to zero would look like alter boys next to this potential bombshell.
NQ shares are still up 70% yoy, which is directly correlated to "stellar" 98% revenue and 69% earnings growth yoy. That said, a round-trip to sub $5 is a self-fulfilling trajectory should just one (IE Yidatong) of the three allegations above prove true.
We shall soon learn the truth
Over 4200 calls now vs 277 puts. Cover short positions, highly recommended.
Will close green.
The elimination of the series H will be accretive to GAAP earnings on a fully diluted basis.
Today is a buying opp.
Only 6 analysts covering RAD vs 22 analysts covering CVS and WAG.
Tier 1 analysts are writing reports to initiate BUY coverage on RAD as I write this post, TBA as early as later today or tomorrow.