This is not "a good solid company". It had bad management that expanded at the top of the energy boom by going into debt to make acquisitions that flopped. It now has $2 Billion in debt and very little cash and is borrowing at interest rates of 11% when "good companies" pay 5-6% for debt. There is no reason to hold this equity and lenders will be tougher and tougher on these energy companies that overspent.
I see $5 per share in value in 24 months as natural gas prices will be back to $4mcf as U.S. gas shipments around the world will be significant in two years along with ever increasing exports to Mexico. Not to mention that oil should go up $10-20 a barrel over the next 2-3 years.
You are wrong. PWE had a distressed sale of assets this month. This was similar to a liquidation value. The rest of the assets are "going concern" assets which should reflect the value when natural gas and oil sell at higher prices in 2017 and 2018, etc. In addition future reserves will be proved on their lands and this will also increase valuation. Company will be worth close to $5 per share in 2017 or 2018. Anyone that invests up to $2 per share should make a killing in 24 months.
I agree this goes to $5-6 in the recession. I see no way they are profitable for the rest of the year. Last quarter was a 5 cent loss per share and I expect this to continue. So paying the dividend when you are not making money is not wise.
My wife and I buy all of our sport shoes online.
The newspapers yesterday reported that Sports Authority was unable to sell any of their stores in bankruptcy and would liquidate the inventory. This is going to take 3-6 months to sell off 450 stores of inventory. Frankly, I think Big 5's recent loss could widen if this much inventory impacts Big 5 more than all think.
Not wise to buy at this price as the share price has been dropping all year, month after month and imagine it will continue until the end of the year.
Investors need to think about the these numbers and what they tell us.
Retire 1% of your debt for 4% of your stock. That dilution if extrapolated tells a great deal about how management. It equates to retiring 10% percent of your debt or around $1 billion of debt for 40% of the stock. That is quite a dilution which should tell all investors a great deal.
Company just issued debt at 12% interest rate. There is $2 billion is total debt and $300 in market cap. The issuer of the last debt was able that kind of interest rate in a zero interest environment because the financials are #$%$. I am in a partnership investment that just acquired an apartment in Austin, Texas and we got a 4.5% interest rate for 10 years. Calumet is toast and lenders will not allow a distribution or dividend to be paid again.
How corrupt is China? A court has allowed another company to use the name "Apple" on its products.
In addition, China is now barring Apple from selling iTunes, etc.
The U.S. Congress needs to think about barring Chinese companies from selling their products in the U.S. if China is not going to allow Apple to sell iTunes.
Also, the brand value for Apple is going to decline in China if another company uses the "Apple" name on its products.
You are right. It is going to take a year to sell out the inventory of the two competitors with 250 stores to empy and this is going to impact sales of Big 5 for the entire year of 2016. If management was smart it would have eliminated the dividend for the year instead of paying out cash when they will have losses all year as they are unable to compete with the stores being liquidated. Those stores are double or triple the size of a Big 5 store and they are wrong that the liquidations will take 3 months. It is not 250 stores being liquidated it is equal to 750 Big 5 stores being liquidated. This is going to take time.
Management needs to be changed but that will not happen.
Big 5 internet sales will not be able to compete against the Amazon model.
Why are they paying dividends when they are not making money at Big 5. This is a recipe for further disaster.
You are right, but I think it goes to $15 as this is the second quarter with losses and the current quarter is over in less than sixty days and it will be another loss. When the dividend gets cut or eliminated this will dive by 20%-25%.
you are right on. There is a ton of inventory to be liquidated out of these huge stores and why the CEO of Big Five thought it would be a sale for a couple of months. This could take six months before the inventory is gone which will clean out so much inventory that sales for the year will be lousy.
Also, Nordstrom's, a very good retailer missed on earnings and the shares dropped almost 8 dollars today. Missing with retail stores is the kiss of death for the stock. I would suggest that shareholders dump there shares and buy back at $8 or $7 or $6 or $5 because the news is going to be bad again for the second quarter which is over in 6-7 weeks.
You need to look at the debt taken on in the new bond issue and 9.25% interest rate paid on the $650 million. The interest rate says it all about the cash flow prospects. I was just involved in a third refi in real estate and this loan was for 7 years at 4.5% while one of the CVI entities is paying double the interest rate. Watch what happens if/when the dividend is cut on the refineries. The bond holders get paid first. A dividend cut will cvi and cvr, just watch.
Market cap is at $330 million and debt exceeding $2 billion, Wall Street brokerages and investors are anti heavy debt load in a market that is overpriced. That is why there is no investor demand for these shares.
they are issuing 50% more shares to reduce debt by $1 billion. How is this oversold with this kind of dilution?
Unfortunately I own a great deal of CHK. The problem is that CHK has been issuing shares, approximately 10% additional equity in the last 30 days to retire a few hundred million in bonds when they have $9 billion in bond indebtedness. Also, they signed fixed price contracts a few years ago to move their oil and gas through pipelines when prices were $100 for a barrel of oil and $6mcf for natural gas. The transportation expense of moving their product makes the revenue from sales unprofitable.
problem is they are not very profitable as earnings are declining and most retail stores are taking a big hit including Walmart, Nordstroms, etc.
CHK basically holds natural gas and price of NG is around $2/mcf, down from $6/mcf two years ago. Big glut. Selling gas at $2 or below is not profitable.
The point I was trying to make is that CVI gets distributions from both CVR and CVR Partners (UAN). The loan interest rate to the fertilizer portion of the distributions is at a crazy 9.25%% which in this day of low interest rates is very telling in terms of how lenders view the risk and the rate of interest charged. If either the refinery margins or fertilizer prices stay low the CVI earnings will take a hit, which means the dividends take a hit and unit/share prices of the entities will take a hit.Remember, Icahn bought CHK at $18 per share and it fell all the way to $1.50 a share. Commodities are like gambling.
I think the oil price will hit $60 but that is a guess as Europe could fall apart as an economic unit and this would create a recession around the world which impacts oil prices. Of course the Middle East is not very stable as that part of the world has been fighting wars for the last 15 years and the oil and gas infrastructure can be damaged further in that part of the world.
Company should cut dividend as they are not profitable in the present market. If they are smart and cut the dividend the equity is going to dive and present a buying opportunity.
Frankly CHK management is the problem. They issued 10% more shares in the last 1-2 months to retire 1% of their debt. Not a good formula. So, even though NG prices have gone from $1.95 up to $2.40 in the same time period, institutions and brokerages are afraid of this name and tell their clients and readers to stay away.