look at the ethanol futures for FY15 - the company will be barely profitable at that margin or even fall back into the red
Oil won't go up for at least another six months - the OPEC is aiming to weaken US shale activities and that is what will happen without any doubt. Face it.
Actually shale is going away at least for some time as new projects will be shelved and others being idled as it does not make any sense to go on given the oil price. SLCA will face cancellations and even worse will be virtually unable to book any new business given current market conditions. FY15 revenue and eps will be weaker than FY15 and FY16 might actually be a disaster.
it won't - current daily overproduction is estimated to be around 2.5 mln barrel and OPEC won't meet again anytime soon. As long as current production rates stay the same the oil price will move down further. I would view the oil price to be closer to $50 than $100 six months from now.
This will be over all of a sudden as customers will cancel out of existing long term contracts as they simply will refuse to pay their dues. Even worse new order intake will be zero for months or even years to come. SLCA will have to shrink the company and suspend the dividend pretty soon.
none of them are in place actually:
- the shares aren't cheap
- the industry is a mess
- revenues and earnings will be lower going forward as the company faces contract cancellations and customer bankruptcies and even worse will face severe problems to get any new contracts AT ALL at least for the foreseeable future
- the dividend is at risk
Given the oil price and the fact that the price decline will last for at least some more months in the face of severe overproduction US shale companies are facing giant losses and plenty of them will go out of business pretty soon as they are heavily overleveraged (like EXXI or CWEI for example). I guess Mr. Buffett doesn't want to be in this space at all.
Actually the lenders would profit the most from forcing the company into chapter 11 as they will get 100% of the newly issued shares after restructuring. Installing a better management or outright selling the restructured company to private equity might actually hold giant gains within a very short time frame for the new owners. By converting the existing debt into equity the company won't be burdened with interest payments anymore and instead would be highly profitable on a cash flow basis.
And this will happen pretty soon. Bankruptcy might be filed any day here. Shareholders will get nothing as there's zero chance for JOEZ to refinance the loans given what happened.
some of these contracts 4 year contracts clearly will be cancelled given the state of the industry - they might be able to collect some cancellation fees but in some cases their partner will just file for ch11.
to open at least 10% lower on Monday. Another field day for shorts is clearly in the cards here.
And given that most decision makers aren't at the desk today I fully expect the shares to open another 10% lower on Monday.
So how many times earnings do you want to pay for a company with declining revenues and earnings going forward and brutal uncertainty in the overall business ? I guess 10 times would be pretty generous and this would still mean a price target below $25.
Just take a look at current FY15 estimates - they are toast. The company would be VERY lucky to equal FY14 numbers but even this looks completely out of reach currently.
actually the right way to look at this is that SLCA wasn't worth $42 without the OPEC decision and still looks way overvalued given what will happen to oil drilling industry.
it is actually not - PEIX actually has profited from some very specific west coast related advantages in the most recent past which other producers don't enjoy. Look for example at Crop.Energies in Germany with the stock at multi years low due to poor ethanol demand.
it is outright dumb buying any energy related company given the oil price situation - if crude drops to $60 PEIX will be back at $6
you are already down thousands of dollar on any position you might have bought 1.5 hous ago
Ethanol futures are down heavily due top the drop in oil prices and this will go on
Nearly 13 percent of the Burger King restaurants in Germany are closing up shop.
Burger King announced last week that it was terminating contacts for 89 franchised locations in Germany after reports of poor hygiene and poor treatment of the staff, reports The Local. All locations were run by the largest franchisee in the country, Yi-Ko.
The termination was set in motion in May, when an undercover report revealed that the restaurants were serving expired food and violating sanitary standards. The Local reports that following the hygiene scandal, some improvements were made. However, new breaches emerged, including the franchisee withholding employees' holiday pay, bonuses and sick pay.
Actually they are burning cash at around $5 mln per quarter which would give them some more time to grow the business but investors would like to see positive cash flow AND higher growth rates. Remember the company has actually struggled during the last few quarters.