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Jordan Arnolds  

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  • Express Scripts: Growth And Value Joined At The Hip [View article]
    The ROE I cited comes from the average reported by Valueline. I do not use SeekingAlpha for stock research that much and cannot find where it lists that, but my assumption would be that a figure of 4.9% is based off of last quarters earnings report - not a historical average. The former P/E of 29.6 was abnormally high and I believe the lower forward P/E represents more of an overreaction to an abnormally bad quarter than a permanent expectation of little or no growth. I agree that Express Scripts' growth will slow from its previous levels, but I don't think it will be low enough to warrant a P/E in the 15 range. The ratio of debt/equity is about 70% and Express Scripts has an earnings interest cover of about 10 times. The debt levels were incurred by acquisitions and are sufficiently covered by cash flows. I don't know where you got your figure for free cash flow, but the sources I have, Morningstar, Valueline, Yahoo Finance, all report free cash flow as positive. Morningstar has TTM cash flow as positive 186 million, Valueline has 2012 cash flow as $3.95 per share, and Yahoo has operating and leveraged cash flows TTM as 2.58B and 3.95B respectively. I would not expect there to be a dividend in a company that is engaged in acquisitions and a growth category - the money would be more useful to shareholders put back into the business than distributed.
    Jan 9, 2013. 05:29 PM | Likes Like |Link to Comment
  • Express Scripts: Growth And Value Joined At The Hip [View article]
    I am not currently adding to my position because I don't have any cash to do so, but I could see myself doing so in the near future by either purchasing more shares or long term out of the money calls
    Dec 11, 2012. 04:02 PM | Likes Like |Link to Comment