at current pricing around $7.50. At this level, management should stop lending money at 10% and instead buy in the stock at the significantly discounted level from book value. While the high yield market volatility might impact mark to markets as long as the US economy remains decent the loans should cash flow.
WPRT needs this deal more than FSYS does, the deal just provides WPRT a source of capital to keep going. FSYS shareholders would appear better off just going it along or pursue with an orderly plan of asset sales and liquidating dividend than this deal. FSYS working capital is around $7.60 per share at the end of the last quarter and the book value per share is around $10.43. The FSYS board, advisors and management should have negotiated a better deal with a sliding share exchange ratio to ensure that shareholders receive net, asset value in the deal versus transferring asset value to WPRT. FSYS shareholders can vote no and send the board back to renegotiate or pursue other alternatives.
Put a similar multiple on RIG and stock would be around $25 per share. Even after the upcoming impairment charges, RIGs adjusted book value should be close to $30 per share.
Should announce a $1 billion stock repurchase plan and send the Shorts scrambling for cover
Sentiment: Strong Buy
$1.1 billion of free cash flow in the quarter, $320 million if you subtract the Maconda settlements. This for a company with an equity market cap of under $5 billion at today's close.
Cash of $3.8 billion at quarter end, Net debt just above $6 billion. Company looks very viable.
Look for the massive short squeeze over time.
Sentiment: Strong Buy
Appears to be around 10x EBITDA using figures disclosed, 2015 250 million pounds of production, assume $0.80 EBITDA profit between market pricing and cash costs. Cash costs disclosed at 1.65 to 1.95 per pound, current copper pricing around $2.40 per pound, average for the year around $2.60 so far. Would appear mine is running only $200 million in EBITDA area for 2015. Copper is not going back to $4 anytime soon. Appears to be a decent deal even if one assumes $3 copper pricing assumed. With company trading around 5x EBITDA, selling an asset at 10x would appear to make sense. Should have sold the whole thing.
Looks like DHR is up to something similar at Caldwell Partners, CWL.TO on Toronto. Look at the flurry of press releases. Appears like market manipulation, fraudulent intentions and deliberate attempt to drive down value which Caldwell is not going for at the moment. Hopefully Bernard Gross and Finra are taking notice of this, would appear to be the same pattern employed on CTP which did successfully crush the value of the CTP.
Timing is good to downgrade on the pop. 2% same store sales growth area is not going to cut it in a rising cost environment and even if the 4% same store growth area for 4 weeks hold that is likely not sufficient for a stock near 30x earnings with system growth at 10% or less. Looks like the company is experiencing serious labor cost pressures. Labor as a percentage of restaurant sales up to 31.7% in the quarter from 30.3% a year earlier. This is a significant move. With a tight labor market, miminum wage legislation and McDonalds and WalMart pay raises going into effect this summer, labor cost pressure is likely to continue to be an issue. If energy prices start to go back up that will put cost pressure into the cost of goods sold line as well. 20x 2016 6.87 or $135 to $140 area would seem to be a generous valuation for this stock given growth prospects.
Apparently the insiders, including the CEO and founder, appear to support the notion of an overvalued of fully valued stock. They sold 1.5 million shares (including the overallotment option) at $6.35 per share net of underwriting fees. Based on the $100 million shelf filing, which includes 3.0 million resale shares for insiders, another offering of comparable size could be sprung upon the market without advance notice. In addition there are 4.5 million stock options with an average exercise price of $2.80 which might provide additional selling pressures as employees look to lock in compensation. In addition to the shares issued as part of acquisitions there could be a lot of overhanging selling pressure on this stock?
Underwriters seemed to acknowledge that by pricing at a 10% discount off market. Doubt much of the stock went to long term investors, probably short termers who will sell back into the market. 70x earnings and over 15x EBITDA seems pretty pricey for a smallcap logistics company.
Relatively to the current $1 area. Company statements appear like situation might be manageable. With G&A and Capex cuts, company might be operating near cash flow breakeven. If the credit receipts plus some asset sales can achieve a refi of the Apollo debt to a lower cost debt structure then there might be some possibilities?