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Cliff, I don't think you can just look at the 2015 estimates alone because AAL isn't paying any taxes...yet. My guess is that they are modeling those numbers on adjusted figures that don't include a tax rate.
The 2016 estimates show a drop of 23% to 7.47. Perhaps even that forward PE of ~6x is cheap in this market, but they could stay cheap for a long time because of the tough 2015 comps AAL will put up.
That could be due to a variety of factors, including pricing, demand, oil costs, and taxes. Historically, we know that airlines have been terrible LT stock investments, so investors are hesitant to stick around for long.
I'm not sure what to do here....it was really oversold and due for at least a ST technical bounce. Now its searching for a solid bottom in low 40s.
Agree on the pre-tax vs net after tax impacts of backing out the patron tax.
However, something is off in the non-GAAP fd share count that RICK is using in its eps presentation. Under GAAP, because of the net loss reported in Q2, there were some anti-dilutive shares that weren't added to the diluted share count. (Which is correct and proper.)
If you are reporting an adjusted profit, you should also calculate the full share dilution as you would if you had a GAAP profit. Hence, the adjusted shares number should be a bit higher, even net of the stock buyback.
In sum, the adjusted non-GAAP eps number should be a bit lower, IMHO.
I also wonder how the crappy weather in TX this quarter has impacted their business too.
RICK. About that patron tax....for their non-GAAP eps calcs, they've been backing out the patron tax since they disagreed with the state of TX that they needed to pay it. (even though expensing it for GAAP numbers)
Now, going forward, they have agreed to pay it.
So how will this impact the non-GAAP eps numbers? They should now have to expense it given that it is part of normal operating expenses. This amounts to 0.15 of the 0.96 non GAAP eps over the first 6 mos of 2015, unless the new 5/patron tax is less than what they had been expensing.
Totally agree with this view on CPSS Cliff. It also now becomes clear why they haven't been aggressively buying back stock yet either.
They'd be idiots to issue stock at these levels, so its likely they would hold off on that and primarily use this shelf for debt issuance. With the stock price so low, it doesn't make sense to use it for acquisitions either.
My guess is that management is using the shelf to register their newly minted options and recently exercised stock. Its a bit excessive and quite piggish of management to issue just over 1MM options to themselves and directors. Not only that, they have timed it a low point in the intermediate trading history. Look at where some recently exercised stock options were granted the last time they did this....around 1.5/share. They had to exercise those because of a looming deadline.
At least most of these options have to vest over a 5 year period. The directors get 150k options that can be fully exercised as soon as 11/19/15.
The exercise price for all these shares is 6.11. So, as of now they are all underwater....
None as much as I like AAOI. I own CIEN, but think its getting closer to FV.
Another tangential play on networking infrastructure is BELFB. I've been a recent buyer of that stock under 18.00, but its still cheap enough now to rate it a decent buy.
I think most here are probably familiar with BELFB. Its been discussed here before and also on the VMC board too.
Optical networking space and the component suppliers are quite active in M&A recently.
INFN buying out a Swedish optical network hardware supplier:
http://seekingalpha.com/news/2417696-infinera-makes-351m-bid-for-swedish-peer?app=n
Future consolidation in the optical network component industry seen as "only a matter of time" :
http://seekingalpha.com/news/2397426-further-optical-component-m-and-a-considered-a-matter-of-time
AAOI could figure in to someone's acquisition plans, especially since they provide quick exposure to the Asian market and big data center buildouts.
Wade, I don't think seasonality is the big issue going forward for AAOI revenues, esp in their data center business. They are primarily constrained by component shortages and once they get that solved (both internally and externally) I believe they have the potential to keep posting 40MM+ quarterly revs for as long as they can keep pumping out these transceivers and the book:bill stays well over 1.0
If I had to guess at seasonality, I'd say Q1 is their weakest because of the impact of Chinese New Year.
It will be interesting to see what they can do to improve margins. Q1's initial forecast had indicated a sequential drop in adjusted net margins, even before the revenue warning. Reading between the lines, I'd blame that on the costs and inefficiencies of quickly ramping up capacity to deal with the component shortages. Hopefully they'll get the margins back up to Q4 14 levels or better by Q2 15, but management was reluctant to fuel that expectation on the call.
Have to disagree with the pessimism here on AAOI. The key takeaways for me from the call were:
1. The supplier issue has been largely solved according to the company on the call. Production levels in the last few weeks of the quarter were finally at previously agreed levels. If the supplier had resolved its staffing issues earlier in the quarter, AAOI would have hit their guidance for rev.
2. Internal production capacity for the 40 G transceivers has been increased by a lot (40% ?) during Q1; this will enable them to produce up to 60% of needed production internally going forward. I take that as a good sign of the company's significantly enhanced ability to meet the full demand (book:bill = 2.4) before the end of 2015. Their internally produced transceivers have been fully qualified by their customers.
Perhaps AAOI will be in the doghouse in the short run, as some investors may want to wait until the company proves it can deliver....but the explanations for the revenue miss make sense to me. On the Q4 earnings CC, mgmt was much more guarded regarding the timing of resolving the component supplier issue. I didn't interpret their answers as waffling about this at all on this latest call. The supplier issue appears to be fixed, demand is really strong, these components are in such short supply and so few companies can supply them that AAOI's customers are willing to sit tight and wait. NO cancellations were received from the company. I see this stock as a solid hold for the next 3-6 mos.
Swick, I agree with your comments on HRTG and KINS. Insider selling is hurting HRTG right now, but my guess is that these sellers need money for taxes (April 15 is right around the corner.) They'll probably finish up in the next week or so and then the stock should push higher.
Either way, I'm happy to add at 21 or below. HRTG should be worth 10x forward estimates (at least). KINS is a similar comp and both represent excellent values in this market.
Check out LGIH, a TX homebuilder. Same back story as HRTG. One of the large shareholders (the father of the CEO) decided he needed some cash to pay his taxes and sold a bunch at the 14 level. Now, the stock is hitting 16 and is still quite undervalued IMHO. The stock had also sold off because of fears that low oil prices were going to cause layoffs in their primary markets, even though the company has been guiding for very strong closings and sales growth.
I should point out that the CEO on today's KINS call did say the following regarding "guidance"
Barry Goldstein - Chairman and CEO
Thanks, Victor. As we've discussed in the past, we keep a very simple set of goals here at Kingstone, which is what we call 20-20-20. That is, we point to a 20% growth rate or better, a 20% operating margin or wider, and hope for a 20% return on equity. During the fourth quarter we achieved the first two of these three, with premium growth at just under 24%, and an operating margin of just under 24% as well.
Our return on equity unfortunately did not make the 20%. But I think 17.7% was a heck of a number to put up. Again, these are not our formal estimates. They are metrics I used to lead the company, and to guide, and gauge how we're doing. Our healthy growth rate continues. We're retaining more of the business we write, we're doing so without straying from the core conservative principles that we have practiced for so long.
---------
So, with a wink and a nod, he's saying KINS management won't provide official guidance but they certainly will try to hit their clearly stated aspirational goals....take that for whatever its worth.
I think they can probably hit 18% ROE fairly easily, but it won't be linear and the Q1 is their toughest quarter as many others have pointed out.
One of KINS' stated goals for FY15 is to have 20% ROE. As per today's Q4 earnings PR:
Mr. Goldstein concluded, “After accomplishing our stated growth and performance goals during 2014, we look forward to improving on those results this year. We remain committed to our goal of achieving a growth rate of 20% or more, despite our decision to exit the Commercial Auto line. We hope to achieve a combined ratio of less than 80%, resulting in an underwriting margin of 20% or greater, and a resulting ROE of 20% or more.
That would equate to approx 8.1MM in net income which translates into 1.09 using 7.4MM FDS.
The company did miss the lone analyst estimate for Q4 and FY14, but appear to have guided for numbers that are substantially higher than the current estimate of 0.98 in FY15.
Could make for an interesting day tomorrow for KINS.
Looking at the cash flow statement for MUEL, in the first 9 mos of the year they had been benefiting from a pension surplus to the tune of 3.4MM. That must have shown up as income somewhere on the income statement and is recorded as a negative item in cash flow.
Now look at the 12 mos OCF statement. That line item flipped to +3.9MM. That meant that a non-cash expense item of 7.3MM must have been charged off during Q4 in the income statement impacting GAAP earnings.
I listened to the AAOI call but didn't take notes. There should be a CC transcript up on Seeking Alpha soon.
CFO said that the supplier component quality issue has been solved; no business was lost or transferred as a result, and ramp up for this product has been somewhat constrained due to limited supply of material (sounds like a global problem?) The company lost around 5MM in revenue in Q4.
Book to bill was very strong; around 1.7x Not sure if that was for a segment or overall, but the takeaway is that their growth is very strong and they could be shipping a lot more product if not for supply/material contraints.
I'd guess the forward estimate for FY15 might be a tad aggressive....but
I think 0.95 non-GAAP fd eps could be in the ballpark. 38% growth is still really strong, with a solid outlook likely to continue into FY16. 15x foward eps is within reach this year, IMHO.
The analysts will soon change their tune about 2016; for those who follow the company closely, its pretty clear that ENTA’s EPS will be higher in 2016 than in 2015, notwithstanding the receipt of one-time milestone payments in 2015. Regards, Dew
Just checked back in with ENTA....it seems that analysts cut their eps estimates for FY15 (end Sept) in half, and continue to trim eps estimates for FY16.
Stock is now trading near 52 week lows based on some of that pessimism. Tough stock to figure out. Playing out like a classic value trap. Looks cheap but could still drift lower. Expected growth in earnings no longer present, so you are seeing a turnover in the investor base...transitioning from "growth" investors to LT value believers.
Hweb, Check out CACC, a decent comp for CPSS:
Just reported earnings (bb 0.07) and the stock soared, now trading at 12-13x FY15 estimates.
If CPSS traded at a similar comp, it would be north of $12/share!
Not saying it (or CACC for that matter) should trade at that multiple, but CPSS looks way too cheap at 6.
I don't follow ENTA very well, other than looking at some forward EPS analyst numbers....and the expectations there are for earnings to fall off a cliff in FY16 and settle in a lot lower than FY15's projected eps.
Its really hard to value companies that have big years in sales and earnings and then drop off. Hence seemingly low trailing or 1 year forward PEs. Are they a value trap?
I like those companies that have more stable earnings patterns and projections. Not that you can't trade the ENTAs of the world very profitably, but you have to have the luck of Wade to do it well.
The revenue and adjusted eps guidance was soft for GILD vs expectations, so the forward projections will come down a bit. Actually could work out better in the long run if the near term (FY15) numbers come down a bit in exchange for a more stable earnings trajectory going out to FY16....but I'm not sure that is what is in the cards either. Competition from ABBV is hurting and will continue to cause a bit of a drag this year and into the future, not to mention that the Sovaldi/Harvoni demand will fall off in a few years as the market "demand" declines because these patients have been cured. Its almost too good of a drug from an investor's perspective!
GILD is a lot like AAPL was a couple of years ago in the wake of its IPhone success; transitioning from one huge success and over-relying on that one product for future growth. Can their pipeline deliver?
Some other news that I see as positive:
Dividend initiated.
$15B stock buyback.
Again, both similar to AAPL. I see a rebound into the 105 - 108 range again, but it will be tough to break through that without more clarity into FY16 imho.
Insider purchase by one of the directors of URI on Friday:
http://www.sec.gov/Archives/edgar/data/1067701/000110465915004271/xslF345X01/a4.xml
Bought $217,700 worth of stock in the open market.
I've been a LT investor in URI (United Rentals), as they appear to be benefiting from the trends toward renting vs buying, and general stronger construction demand as the economy has slowly strengthened over the past few years.
The stock has been sold off this year because it has some exposure to the oil/NG exploration industry (approx 6% of revenues are tied to upstream oil activities). I was interested to see their latest earnings report
https://finance.yahoo.com/news/united-rentals-announces-fourth-quarter-211000163.html
....which confirms that they are seeing some headwinds from the oil industry but that there are positives that benefit other customers to offset this as well. Seems that many investors/traders are choosing to ignore that in the rush to sell and avoid any exposure to oil/NG. I highly recommend reading the CC transcript as management addresses the oil concerns head on:
http://seekingalpha.com/article/2842836-united-rentals-uri-ceo-michael-kneeland-on-q4-2014-results-earnings-call-transcript
The stock is trading at 11x forward EPS estimates; estimates I think are too low given the latest guidance from the company. They tend to be a "beat and raise" type of management group too, if they stick to the same forecasting methodology that has served them well in the past two years. I added to my position this week in the 83s when it sold off after its earnings release. Could be one to add on weakness if you believe my oversold/unloved thesis is correct.
I spoke with AAOI's IR, and she didn't have much more information available to pass on. It doesn't sound like a design issue, so I'm guessing its truly temporary and fixable within the Q1. She couldn't comment definitively on how much revenue was lost, but indicated that they would not have missed had this supplier issue not occurred. Also didn't sound like its lost....just deferred. Of course, if they can't resolve it, they could lose the end customer.
Also asked if they could source another supplier for this part. Answer: yes, but they are choosing to stick with existing supplier and resolve the issue as a first choice.
I think this decline is a pretty good moment to pick up shares. I added some yesterday in the 8.30s
Did they share any more details regarding what type of problem it was? How much of a design vs build issue? Also wonder if they could use other suppliers that can produce the same component. I have a call in as well but haven't heard back yet.
They did state that the issue was "temporary" in the PR.
"we identified a quality issue with certain optical receiver sub-assembly components sourced from an external supplier and therefore we were unable to ramp production levels for our new 40G data center transceivers as planned, and this temporary supply problem impacted our revenue results for the quarter.
I agree Hweb2. I've been a buyer of AAOI in the low 9s and will look to add tomorrow on weakness.
I've posted on AAOI before, so you can search to find that first comment I made last month on it. I really like the trends here and while the miss in the quarter is disappointing (and not the first BTW), I think the stock has corrected and a lot of this should be baked in.
What's also encouraging besides the high book-to-bill ratio is that margins are steadily increasing as they ramp up their revenues. With higher margins in Q4 and flat sequential rev growth, I'd guess they will report 0.21 (adjusted non-GAPP) for Q4, with plenty of growth likely in FY15.
Sure seems like its worth a lot more than where its selling right now!
Impressive HALO presentation delivered today:
http://d1lge852tjjqow.cloudfront.net/NasdaqGlobal-HALO/a230b400-b9aa-4498-a80c-e6dd86713fa1.pdf?noexit=true
Shows very promising results in attacking specific types of pancreatic cancer....
Specific HALO agent (PEGH20) increases the permeability of the membrane of the cancer cells, allowing the primary cancer drug better entry to attack the disease. Studied in other types of cancer as well, including lung, and shown to be equally effective in extending life.
GIG out with positive news this AM:
http://finance.yahoo.com/news/gigoptix-updates-fourth-quarter-full-140100871.html
Expects revs to exceed the high end of their guidance range. Could bode well for AAOI, which is a supplier in the same industry.
GIG PR:
"Continued robust demand in the Company’s datacom and Industrial businesses, and stable telecom demand, are the primary reasons for the higher revenue."
About GigOptix, Inc.
GigOptix is a leading fabless supplier of high speed semiconductor components that enable end-to-end information streaming over optical and wireless networks. The products address long-haul and metro telecom applications as well as emerging high-growth opportunities for Cloud and data centers connectivity, and interactive applications for consumer electronics. GigOptix offers a unique broad portfolio of drivers and TIAs for 40Gbps, 100Gbps and 400Gbps fiber-optic telecommunications and data-communications networks, and high performance MMIC solutions that enable next generation wireless microwave systems up to 90GHz. GigOptix also offers a wide range of digital and mixed-signal ASIC solutions in a wide range of technology geometries from 28nm to 0.6um, and enables a complete product life cycle support from swift introduction of new product to extension of legacy products.
GILD is off by about 10% in premarket on news that Express Scripts is going exclusively with ABBV's drug for curing Hep C. Express S. is a big PBM (pharmacy benefit manager) in the health care market. This is being viewed as a game changer for not just GILD but all biotech as it shows the significant price power PBMs like Express have.
GILD also was facing the prospects of a slowdown in revenues and earnings growth in the FY16+ as its wonder drug cures its patient and no long term drug treatment (and revenue/profit stream) is possible.
Still, if I were short GILD (and a lot of people are), I'd think very seriously about covering right now. I think the worst of the news has been baked in....but I'm certainly no pharma vet.
Hard to find a cheaper biotech play in the market....but perhaps you get what you pay for. If I were GILD I'd be launching a huge stock buyback now.
TPC named as one of FBR Capital's "top picks" list: (I agree with the analyst's comments, obviously) My own price target is about 32-34, pending Q4 results.
Tutor Perini (TPC) Added to FBR Capital's Top Picks List
FBR Capital analyst Alex Rygiel named Tutor Perini Corporation (NYSE: TPC) to its Top Picks list, while reiterating an Outperform rating and price target of $38.00. The firm is also raising estimates for claims' settlement.
Rygiel commented, "Yesterday, December 17, Tutor Perini Corporation (TPC) announced it settled all claims with MGM/CityCenter on December 12. TPC is set to receive net proceeds of $189.5M, including some prior payments, with our expectation of cash inflow of approximately $150M in 1Q15. In November, TPC announced it finally settled the Central Artery Project with the Massachusetts DOT, for which the company recently received $52M. The combined cash infusion ($202M total or approximately $4/share) is expected to be used to pay down debt and for working capital needs. We are raising our EPS estimate for 2015 to incorporate the lower interest expense.
The analyst added, "We are placing TPC on the FBR Top Picks list and reiterating our Outperform rating given the recent weakness in the stock, as (1) we think cash flow from the aforementioned settlements significantly improves the balance sheet; (2) we believe recent backlog growth is only the start of a multiyear improvement; (3) profit margins could improve as greater volumes leverage fixed overhead, contract terms and conditions become more favorable, and pricing power develops; (4) we project revenue growth of 10%–15%, EBITDA growth of 15%–25%, and EPS growth of 25%-plus over the coming years; and (5) we think TPC has an attractive valuation relative to peers, as the shares trade at 5.2x our 2014 EV/EBITDA estimate, below the E&C average of 8.7x and the historical E&C average of 10.0x trailing-12-month EBITDA."
For an analyst ratings summary and ratings history on Tutor Perini Corporation click here. For more ratings news on Tutor Perini Corporation click here.
Shares of Tutor Perini Corporation closed at $21.95 yesterday.
Hweb, KINS looks cheap to me too at <8. I was a buyer yesterday as well.
Thanks for catching my mistake. Meant to say the MGM casino case in Nevada was settled out of court yesterday NOT Seattle!
TPC filed an 8K this AM that had a little more information about the MGM settlement:
--------------
On December 12, 2014, Tutor Perini Corporation and Tutor Perini Building Corp (collectively “Tutor Perini”) entered into a Settlement Agreement with MGM Resorts International (MGM) and CityCenter Holdings, LLC (CityCenter), and the related Perini subcontractors and relevant insurers to resolve all outstanding project lien claims and CityCenter counterclaims relating to the CityCenter Project (CityCenter Settlement Agreement). The settlement is subject to execution of a global settlement agreement by all parties by December 31, 2014, and CityCenter’s procurement of replacement insurance (which replacement insurance costs are the responsibility of CityCenter).
The CityCenter Settlement Agreement, combined with prior proceeds of approximately $51 million from CityCenter to Tutor Perini, will result in total net settlement proceeds to Tutor Perini of approximately $189.5 million on its CityCenter lien claims.
Under the CityCenter Settlement Agreement, Tutor Perini will make cash contributions of approximately $11 million to CityCenter in addition to a waiver of a $2 million insurance bonus to resolve all CityCenter claims. The CityCenter Settlement Agreement resolves Tutor Perini’s and the subcontractors’ lien claims against CityCenter and MGM, and all of CityCenter’s counter-claims against Tutor Perini and the related subcontractors. The CityCenter Settlement Agreement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by Tutor Perini, CityCenter, or the related subcontractors.
-----------------
In the PR, they mentioned that they also received $52MM from the state of MA on the Central Artery project. When you add this to the $125MM net new cash they will receive from the MGM/City Center case, that will be a huge amount of cash coming in to TPC (approx 3.60/share with the stock trading in the low 20s). I'm hoping they might put some of it back to work with stock repurchases.
Actually, there is news out today that a settlement has been reached in the Seattle case (Yes, I was referring to that earlier.)
http://abcnews.go.com/Health/wireStory/settlement-reached-trial-flawed-vegas-hotel-27639329
Here is the part that concerns TPC:
The lawsuit was launched with Tudor Perini arguing that MGM Mirage failed to pay bills and MGM arguing the contractor was responsible for the building flaws.
Lawyers for all sides called the settlement confidential, with no admission of liability or fault.
But MGM Resorts laid out general terms in a financial filing Tuesday with the Securities and Exchange Commission.
CityCenter Holdings ? which is half owned by MGM Resorts ? gets $110 million more than the $85 million it received through prior insurance claim settlements. That brings CityCenter's settlement proceeds to $195 million, including $20 million from MGM Resorts to the CityCenter division it co-owns with Dubai World.
MGM Resorts is paying a total of $153 million to Tutor Perini, including $72 million MGM Resorts had in escrow from CityCenter condominium sales.
Overall, the settlement represented an end to a $500 million dispute.
-------------
Combined with the 89MM that TPC got from MA settlement, that is a huge influx of cash ($242MM, unless they mean just the escrowed amount, which would still equal 161MM). Wonder what they'll do with it?
sskillz, I hope you are right. I don't mind the short term pain if that's all it is.
We also can't ignore that the overall market is tanking quite hard due to fallout from the collapse in oil prices. Unless you are a hard core contrarian, have a longer term horizon, and are used to catching a falling knife, then a lot of the cyclicals that are tied to oil and other commodities should probably be avoided.
R59, I don't know why the stock is so weak, but its always this type of price action that makes one think "somebody knows something!" There is no obvious catalyst other than two items: 1) they missed out on getting the High-speed rail contract, which could have added nearly $2B to their already high backlog, and 2) there is new litigation that is beginning in Seattle.
I've listened to the last few CCs, and TPC management seem quite bullish on their prospects and the sector, especially the big civil projects going forward. I think there are a lot of moving parts in their business model, and thus its tough to predict quarterly earnings. They have disappointed in the past (although not so far this year!), and so forward PEs will be low. I think the market has over-reacted here and I think anyone buying in the low 20s has a decent chance of earning 30 - 50% in the next 6-9 mos.
Cliffvb, that is true re: TPC and ongoing litigation. BTW, they were ultimately victorious in their long-running "Big Dig" legal dispute with the state of MA. The CEO (Ronald Tutor) comes across as a no-nonsense guy who clearly doesn't back down when he feels his firm has been unfairly accused of wrongdoing.
Would be nice if he and other company insiders felt the stock was cheap enough around 21 to start buying stock in the open market. I'm scratching my head to understand why its been so beat up, other than its seen as belonging to a cyclical industry. The TPC of today is much different than it was 7=8 years ago at the last peak of the cycle.
TPC's bid for the next leg of the California High Speed rail project came in 2nd (among three bidders)
http://www.latimes.com/local/california/la-me-bullet-train-bid-20141212-story.html
Disappointing, but it was never in their backlog to begin with. Based on the article, its clear that this wouldn't have impacted FY15 estimates at all anyway, even if they had won. Business still seems quite strong and the company is bidding on multiple other projects...hopefully they will be more successful.
Quotes from the TPC Q3 2014 CC transcript:
"The Civil group continues to see a very strong pipeline of in excess of $10 billion of prospective work to be bid and awarded over the next 12 months. The largest of these prospects continues to be construction packages 2 and 3 of the California High-Speed Rail. Last week, our joint venture team led by Tutor Perini and including Zachry and Parsons submitted its proposal for this project. The scope of work is essentially to design and construct the next 65 miles of railway civil infrastructure, extending south of Fresno to the county border of Kern County in Bakersfield. We're competing against 2 other European-led teams and expect the winning bidder to be announced before the end of the year.
Other Civil projects include approximately $5 billion in various highway, airport and mass transit jobs in addition to $2 billion in various bridge jobs currently being reviewed.
--
Overall, the company's total backlog was $8.1 Billion as of the end of Q3. That is up 17% y/y.
Perhaps the lack of recent award wins is weighing on TPC? That and the latest budget stalemate out of Washington doesn't help either. Either way, I think the stock is way oversold and should see a bounce back up to the 27-28 level. Winning another big contract might do the trick.
Really surprised to see TPC (Tutor Perini) back down near its 52 week low. This engineering/construction company has a huge (and growing) backlog and beaten analyst estimates each quarter for the past year. Not as dependent upon volatile private construction work....rev mix now favors more stable public work and infrastructure.
Nice SA article here:
http://seekingalpha.com/article/2737335-tutor-perini-an-oversold-small-cap-gem
I agree with the author's comments and have been a buyer today in the 23.70s. Think its way too cheap right now.
Trades at 8x FY15 eps estimates. I think it should trade closer to 12x, given the strength of its backlog, past performance and projected growth.
One of AER's largest shareholders (Waha Capital) has indicated via filing that its entire position has now either been sold or fully hedged. They had approx 30MM shares originally, or just over 14% of the entire company.
These transactions have been weighing heavily on the stock since the first tranche was announced back in Sept.
R59, what is your view on this? I'm apt to view it positively, but it may still take a while to absorb all the shares that have been recently sold (or will continue to be sold for hedging purposes). Given that the stock is trading near the bottom of the first collar's range, I'd think that the counterparties would be more apt to be buyers rather than sellers....but they may still want to hedge further downside risk from the 2nd collar.
Bought two stocks today, ECPG and AAOI. ECPG is one I've mentioned here before; they are a debt collector/tax lien agency and have consistently been growing their adjusted eps at 15%+ over the past few years. Analysts have the company continuing that 15% growth trend over the next two years. I'd be happy if the stock could see a modest 12x multiple on forward earnings....it currently trades at 8x FY15 projected eps. I think there is concern about the decreasing supply of bad debt in a stronger economy; while that may be true here in the US, the company has been expanding its global footprint with acquisitions in Europe and South America. I think its just drifted lower with no real news or a compelling catalyst to own the stock. In the last 10Q, the company indicated that it had been a modest buyer of stock around 42. I'd expect them to continue that with the stock back down below 42 again.
AAOI is an optical components supplier to high speed cable networks in the US and Asia. Their primary customers are building big data centers in China. Two listed in a recent company presentation are Alibaba and Baidu. They also count Amazon as a customer as well Earnings last quarter were slightly below expectations, and the stock sold off fairly hard even though y/y growth was excellent. Recent selling is happening on no news that I could find, other than estimates for FY14 and FY15 being reduced. Slap a 15x multiple on FY15, and this one could be back into the upper teens next year. At $10/share, its back to its IPO price over a year ago. Its much cheaper now than it was then.
I continue to like the RF semi segment; my favorites are TSEM and RFMD. Still hold a little NXPI, but have been selling it down as it goes higher and reaches a more reasonable FV. Also have owned Skyworks but think its fairly valued now and have sold it.
Your welcome micham. With a customer list that includes RFMD, Skyworks, NXPI AND Avago, it was really clear that business was (and still is) booming for TSEM.
Now, if they can just clean up their balance sheet and get rid of all the warrants and converts that are part of their current outstanding notes, then the stock is really off to the races.
If you listened to the last CC, management hinted that they were going to do exactly that. May not happen as quickly as I'd like but I think they will take care of it in pieces over the next two years as their cash flow improves.
The stock has been on fire, and given the speed of its ascent, I think it will take a breather here (in the low 13s) for a bit before it hopefully charges a bit higher. Still haven't sold any, although I was sorely tempted to trade out of a few when it spiked up over 13.25 today.
You did really well to get it that low! Good luck....
I've sold most of my shares in CCS in the low 17s. This was a bad miss, and the company was telegraphing things when they issued the PR about the 2MM share buyback a few days ago.
Growth is still there, but the sales and margins (and thus eps) are way too optimistic.
I'd expect the stock to hit the "reset" button as well, as analyst adjust their earnings expectations downward by quite a bit. CCS may not even earn 1.00 this year, so I'd be hard pressed to see them substantially higher in the short run.
With so little visibility into the revenue mix and thus margins, its hard to know what the company can consistently earn going forward. Stock looks like dead money for now. To make matters worse in the short run, its a new IPO this year, and so some locked up shares will start to freely trade in December.
The homebuilder I'm most high on at present is LGIH. Better margins and seemingly better visibility too.
Update on HUN. After the close, one of the company's directors filed a form 4 indicating he had purchased 450,000 shares at 24.00:
http://www.secinfo.com/d1526c.n76d.htm
Also, analysts have been pushing up their estimates since the last earnings call:
https://finance.yahoo.com/q/ae?s=HUN+Analyst+Estimates
Stock is still pretty cheap.
R59, the move on AMKR is likely tied to the rally in the semis that is across the board. My guess is that its short covering primarily, with some speculative longs taking a position that the sell-off is near its end.
AMKR's last report was not great vs expectations, and until we get some visibility into FY15, by guess is that its close to FV here in the 6.50 - 7.00 range.