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Ranjit Thomas, CFA  

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  • CKE Restaurants: On a Roll in Tough Economic Environment [View article]
    Don't you think it was curious that they had a big drop in interest expense even though the debt level is up? The interest expense amounts to a 2% interest rate on their outstanding debt, which is abnormally low. The explanation can be found in their 10Q. The co. recognized a non-cash gain on interest rate swaps of $2Mn this quarter, which contributed all of the "beat". They had a similar situation last quarter too. In the past, when this item was a loss, the co. was quick to point it out. Now when it's a gain, they quietly sneak it in, and gullible investors lap it up.
    Sep 18, 2008. 08:43 AM | Likes Like |Link to Comment
  • Cooper Companies: In-line for '08, Positioned for Asian Growth [View article]
    Perhaps you didn't notice that the co. used an unusually low tax rate of 4% in their proforma figures for this quarter to arrive at a 67c profit. Using a normal 20% tax rate, EPS would have been 55c - a big miss from the 65c expectation. The company's earnings quality is poor with constant proforma exclusions for restructuring costs and the like. In fact, free cash flow over the last twelve months has been negative.
    Sep 9, 2008. 08:28 AM | Likes Like |Link to Comment
  • Hill International: A Play on Global Infrastructure Growth [View article]
    The company is trading at more than 30x EPS and 240x trailing FCF. Next year's estimates look like a pipe dream. A rich valuation and poor cash generation looks like a recipe for a disaster - this is an ideal short.
    Sep 3, 2008. 08:16 AM | Likes Like |Link to Comment
  • Hill International: A Play on Global Infrastructure Growth [View article]
    The company is trading at more than 30x EPS and 240x trailing FCF. Next year's estimates look like a pipe dream. A rich valuation and poor cash generation looks like a recipe for a disaster - this is an ideal short.
    Sep 3, 2008. 08:16 AM | Likes Like |Link to Comment
  • 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
COMMENTS STATS
84 Comments
51 Likes