Evaluation Of My Position In Textainer Group Holdings: Sell, Hold, Or Add?
- TGH has released its 2nd-quarter results, and I feel ambivalent about it. Revenue and utilization increased, but net income dropped.
- In the past 10 quarters, the interest coverage ratio has declined from over 4x to under 3x, based on the most recent earnings release for Q2 2014.
- Estimated earnings projections for the next 5 years are around 5%-6% per annum.
- The lack of a recent dividend increase seems to suggest management is also slightly conservative about future cash flows.
- Geopolitical tensions around the world and trade sanctions between Russia and the rest of the world could impact business operations. Considering the current valuation, it's a hold for me.