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Ranjit Thomas, CFA  

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  • Corrections Corp: Go Directly to Jail, Do Not Pass Go, Do Collect Big Returns [View article]
    This stock is trading at 22x EPS, and generating no cash. Free cash flow has been consistently negative, and getting worse. If anything, this looks like a good short to me.
    Aug 18, 2008. 08:44 AM | Likes Like |Link to Comment
  • Steak N Shake's New Direction Is Terrific News for Shareholders [View article]
    For the trailing twelve months, SNS's free cash flow is about zero. So your projections look like a pipe dream. The company is raising cash by selling and leasing back properties, which provides a one-time boost to cash flow, but results in a higher operating expense on a continuing basis. The reality is that this is a company that is generating losses, showing decreasing revenue and has a fair amount of debt - usually the recipe for bankruptcy.
    Aug 12, 2008. 09:04 AM | Likes Like |Link to Comment
  • Steak n Shake: Watching and Waiting as Biglari Names Himself CEO [View article]
    The company is unprofitable and burning cash with no sign of a turnaround. Bankruptcy is a possibility. Be generous and put a 0.5x multiple on revs, and this is a $5 stock.
    Aug 8, 2008. 01:05 PM | Likes Like |Link to Comment
  • Electronic Arts: Growth is Coming [View article]
    The stock is at 27x forward proforma EPS, which excludes a significant amount of stock compensation. This hardly looks cheap. Besides, the company is hardly generating any cash, indicating poor earnings quality.
    Aug 5, 2008. 07:59 AM | Likes Like |Link to Comment
  • Genesee & Wyoming: A Great Buy at Current Lows [View article]
    I don't see why it would be a buy at 25x EPS. And look at their free cash flow - it is negative, indicating poor earnings quality.
    Jul 31, 2008. 04:04 PM | Likes Like |Link to Comment
  • Can Iron Mountain Keep Investors Safe from a Recession? [View article]
    Well, the stock is at 35x EPS; the company hardly generates any cash and is growing organically in the single digits. I'd say it's hugely overvalued at the current price.
    Jul 29, 2008. 10:18 AM | Likes Like |Link to Comment
  • Is Valero a Better Buy than Exxon Mobil? [View article]
    Agree on the margin/volume concerns, but at 7x EPS, one is presumably being compensated for this risk, with potential upside from higher margins if crude oil falls.
    Jul 16, 2008. 09:30 AM | Likes Like |Link to Comment
  • Autoliv: Cashing in on Safety [View article]
    The auto industry downturn is obviously a negative, but the stock is at a single digit multiple of EPS and free cash flow. Stock buybacks, especially at this level, are tremendously accretive. I can see more than 50% upside to the stock.
    Jul 16, 2008. 09:27 AM | Likes Like |Link to Comment
  • Ensco International and Oilsands Quest: Two Diverse Energy Bets [View article]
    Agree, ESV is good value at this price. If you'd like to hedge it, HP looks overvalued at 17x EPS and negative free cash flow.
    Jul 10, 2008. 09:28 AM | Likes Like |Link to Comment
  • A. Schulman: Cashless Profits [View article]
    Thanks for your comments. I did write a follow up piece, where I said I could no longer recommend a short position after the stock came down post-earnings. I will periodically be writing about stocks I am bearish (or bullish) on. You can watch the space under my bio for new articles.
    Jul 7, 2008. 06:05 PM | Likes Like |Link to Comment
  • Goodrich Petroleum: Gas in the Ground Doesn't Mean Cash in the Bank [View article]
    Thanks for all your comments. I agree that when valuing at a company, one should look at the NPV of future cash flows, and not just one year like 2009. However, as I am putting a 25x multiple on '09 earnings, I am capturing the cash flow from many future years, and also assuming that the cash flow will be growing. I think the optimists have grossly underestimated the extraction costs (both operating and capital) involved. Only time will tell. Today, the company announced a secondary equity issue - I pointed out in my article that this was a possibility and something they have frequently done. Clearly, this is an indication that management believes the stock is overvalued.
    Jul 7, 2008. 06:02 PM | Likes Like |Link to Comment
  • Quanta Services: Piggybacking on the Alternative Energy Boom [View article]
    Thanks to all for your comments. First, to correct a mistake, I am short PWR, not PBR. That was an inadvertent mistake on the part of SA. I agree with some of the qualitative comments that people have put forth, but all of them could have been (and were) made a year ago. Yet, the company has generated only $15Mn of cash in the last year. Not one of you has provided an explanation for this disconnect. My point is simply that a company that generates $15Mn/yr, with no signs of this improving, is not worth $5Bn+.
    Jul 7, 2008. 05:55 PM | Likes Like |Link to Comment
  • Copart: Good Technical Strength and Solid Fundamentals [View article]
    As you point out, trailing 12 mths free cash flow is $91Mn. But the market cap is $3.5Bn! A 38x multiple on FCF sounds like a short to me. You say it would be nice if the co. paid a dividend. Now you know why they don't - they can't afford to, 'coz they hardly generate any cash.
    Jul 7, 2008. 08:08 AM | Likes Like |Link to Comment
  • Goodrich Petroleum Well Positioned to Go For Shale [View article]
    How about backing up your analysis with what you think the company will do in terms of revenue, earnings and free cash flow? You will quickly realize that this stock is grossly overvalued on a fundamental basis.
    Jul 2, 2008. 12:45 PM | 1 Like Like |Link to Comment
  • Coal Keeps on Cooking [View article]
    Well, these companies aren't making any money now, and future profit expectations seem wildly inflated. They are based on companies being able to sell all their production at current spot prices, while their costs would remain flat. The problem with this is that as every producer tries to sell in the spot market, current prices are unlikely to hold. Also, costs are going up dramatically.
    Jun 28, 2008. 10:32 AM | Likes Like |Link to Comment
COMMENTS STATS
80 Comments
42 Likes