Another ugly sector, another demolished name. But a well run company whose valuation finds itself drastically under book value. Management took a 24.5 million impairment in Q4, otherwise the company was still profitable, earning 10 million. Management also indicated on the call that the impairment was significant and another similar charge was unlikely. That gives me confidence that the differential between the book value and the share price is an indication of real undervaluation. They also doubled the buyback share amount, from 1 to 2 million, which if ultimately filled would be 10% of outstanding shares.
The stock has been on a tear from the $5 level, but sits at 30% of it's peak valuation from 2014. It's retained earnings in the last 4 years of roughly 150 million, more than it's present market cap. There's a growth plan in place, the leasing mix has skewed almost exclusively towards rail cars with new capital investment, and the management is confident they are in a good spot in the market. Overall, it seems like a worthy investment, favorable risk reward, a value stock. You're buying after the damage has been done.
Price as of close, February 22nd
CAI International - $7.23