thats more than you can get with a junk bond fund. and who wants to be in that??
this is more solid, the most solid i can think of for that kind of yield.
the world is kinda want to have food over the years. if this is the lowest cost place to make the fertilizer, then who cares what the daily price of corn in Peoria is??
very little government content in these new energy infrastructure projects. except maybe some foot dragging over a needed pipeline here or there.
i just wish they would raise the dividend substantially. To at least 2%, if the earnings are real they have it to give. they don't need cash as they only waste it on expensive buyouts. the cash flow is going backwards, likely due to favorable payment terms to gain this avalanche of new work.
i believe their main competitor in the Ill. Basin is Peabody. BTU is losing money, and it looks like ARLP can ramp up production and take away their ability to continue to operate. Then the lock in price can go even higher, raising our margins again.
Just announced. A plant they are building in SC has huge cost overruns. Likely a major contributor to cash flow under runs. Likely when the change orders for that cost overrun get processed, then the revenue will catch up with expected job margin capture. Now that the announcement is out for the owners, the issues can be discussed by CBI management.
yes, understanding those entries is key to this mystery. We had an announcement today that a CBI construction job ( SC Nukes) has announced a massive cost overrun, due to delays, and reengineering over a period of years. No real surprise, just the magnitude of the cost overrun ( 1.2 B !!) was made public. There will be change orders for this and eventually either a progress payment, or a claim. either way, this could explain the lack of cash flow, without an announced change in projected earnings. keep your fingers crossed. public utilities usually pay their bills.
I have to disagree with both your premise and your conclusion. the price of oil is an intermediate term problem, although you are correct that its a drag in the moment. the longer term trend remains in place. That is the monetization of the shale gas that is excess and required massive investment in power, pipelines, LNG, petrochemical,fertilizer plants to exploit the value of the US excess gas. Incremental investments in upstream oil production are small compared to the mid and downstream clients whose projects are still ramping up, and driving up E&C utilization, and eventually margins.
just got thru listening to the CFO discuss cash flow. As expected by those who understand this business, the cash flow discrepancy comes from two major items, both improved this quarter. The ongoing Nuke jobs have unresolved, change orders, in the hundreds of millions, although the company expects at the end of the day that those added costs will be recovered. no charges agains earnings announced. the other factor is just simple cash management discipline around the world, getting the bills out and collecting timely on acts payable. There is no mystery here, no hidden stuff, and the CFO made a point to say that last quarter call was the first of over 30 that he has missed.
they broke out cash flow for the quarter on the non-Nuke portion, and its + 300M$. they expect Q4 2014 to catch up on the nuke side and be hugely positive on cash flow, although all of this emphasis is missed placed, its just timing of payments. What matters is that book to bill is 1.3, and margins are up 10% over last year, and current higher margin jobs are replacing lower margin jobs in the shops.
This company is giving you 30% revenue growth and 35% income growth. Where else can you get that? Coke sells for 20X earnings, and has negative growth. And we sell for 10X earnings. this will correct itself, but the correct story needs to play out, and the nonsense needs to fade.
I'm already into this more than i should be, and hope to recover my 25% soon, and get back to growing my stake along with this company.
yes its too low, but they need their cash for running the business. larger cash reserves, means a greater willingness to bid on large, risk projects. so far the upward trend on backlog indicates things are going well, and as long as margins on each job keep with un upward trend, all is good. lets watch them wittle that debt from the Shaw purchase at least in half before we get greedy for divvy.
i think that is too hard a question. on paper, i see the debt hanging there, and i don't see the expanded earnings to pay it off quickly. on the other hand, the margins we are getting on recent sold work, look much better than before the purchase. its always good with one less competitor.
well , I can only hope we are right. I'm patient enough not to let Wall Street momentary valuations get me to give up. By that i mean that major E&C companies usually trade about 12-18 Xs forward earnings. We are currently well below that range, and earnings have been increasing. So, there should be good news ahead.
cost over runs never "happen" during the last couple months of a multi year project. They may finally be reported then, or the management may have unrealistic hopes that costs will suddenly turn around, but most projects go over budget way early, when the scope of the project exceeds that on which the original estimates were based. never yet see a project where final construction, and commissioning expenses turned out way less than planned. Doesn't happen.
they could never do another gas turbine job again, and it wouldn't move the needle. sounds like you have some myopic issues with one smaller part of the CBI universe??
i see the shadow, but it should be fading with time, and all the work that has been sold with good margin since that time. stocks are supposed to be about the future, not the past. i remain convinced that a year from now anything below 70 will look like a good entry for a long term hold . I'm willing to wait and see. Had a similar experience with Kinder Morgan, and that has worked out just fine, with a very similar attitude on the part of the two managements in the face of unrelenting criticism and short attacks. what would change my mind is if a couple of the client markets would lose momentum, and start in spending reductions on new projects. I just don't see that with $4 US natgas.
what part of double digit revenue and income growth is giving you pause? We are selling for less than 10X next year earnings. compare that to KO, or PG, IP, HON, or other industrials that have about twice the PE ratio.
it floats with the price of oil. no good reason for that, explanation probably has something to do with ETF groupings. nice to see some early acknowledgement today that next year earnings are on track for double digit improvement. can't trade below 10x earnings forever.
need oil price to stop dropping. the street can't separate energy names based on the kind of business they are in. see also PSX, SLB, JEC