10/04/2008

Avalon Holdings Corp AWX: Real Estate Play?

Company website

http://www.avalonholdings.com/

Not quite the bargain at 2.70 per share or a EV of 16,259,700 million that I first thought the other night. This is far from a slam dunk and could turn into a value trap by going dark with deregistration of shares.

The original attraction was primarily the real estate holdings as follows; The PPE of 35 million was significantly higher than the EV of 16.259 million coupled with their profitable waste management business made the idea an interesting investment at first glance.

Taken from the recent 10k

PROPERTIES
<ALGI owns an 18-hole golf course and practice facility on approximately 200 acres, a maintenance and storage building of approximately 12,000 square feet, a restaurant building of approximately 10,400 square feet, and a banquet facility of approximately 7,000 square feet. ALGI currently leases the restaurant building and banquet facility to a third party operator. All of ALGI’s facilities are located in Warren, Ohio.
TBG, Inc. leases and operates the Avalon Golf and Country Club at Squaw Creek in Vienna, Ohio, which includes an 18-hole golf course and practice facility on approximately 224 acres, an outdoor swimming pool, four tennis courts and a 67,000 square foot clubhouse that includes a pro shop, fitness center, restaurants and banquet facilities.
Avalon Country Club at Sharon, Inc. owns an 18-hole golf course on approximately 130 acres. The clubhouse is currently being renovated and additional banquet and recreational facilities are being constructed. When completed, the renovated clubhouse and recreational facility will be approximately 80,000 square feet and will include a pro shop, dining and banquet facilities, an outdoor swimming pool, a spa and fitness center.
The captive landfill management operations use approximately six pieces of equipment (such as bulldozers, excavators and backhoes) all of which are owned or leased by ALMI.
Generally, Avalon’s fixed assets are in good condition and are satisfactory for the purposes for which they are intended. >>

Avalon Holdings Corp AWX derives most of its revenue from the waste management industry. Over the last 4 quarters they reported revenues of 44.66 million.

Important financial data;

EV/Rev = .33
OI-Taxes/EV = 3.36%
CFFO/EV = 28.77%
FCF/EV = -58.37%
The negative FCF was significantly impacted by additional improvements made to their Golf properties over the past 12 months

EBITDA = $1,840,000

Per Share Data

Cash+AR-Ttl Liab = .82
Cash – Ttl Liab = -1.08

CFFO/NI = 2.32
52WkChng = - 58.87%
Cash%Price = 32.07%
No Shorts
Financial Health = C
Growth = C
Profitability = F
PPE/EV = 233.54%
Qtrly Rev Growth % = 1.60%

P/S of .33 is trading a slight discount compared to the prior 3 years.
EV/MC = 1.37
EBITDA/EV = 12.18%
3,803,000 shares outstanding
MC at a price of 2.90 = 11,028,700
Cash = $3,552,000
AR = $8,148,000
FA = $35,633,000
CL = $8,552,000
TL = $8,783,000

EV = 11,028.70 (MC) – 3,552 (Cash)+ 8,783(TL) = 16,259,700

For $16,259,700 EV you are getting $44,662,000 in annual historical revenue and PPE recorded at a historical cost of 35,600,000 million.

6 comments:

ragnar said...

This is off subject, but, out of question, did you pick up any more DRAM today? I picked some up at 1.31

I never thought that I would ever see a security trading at such a retarded discount to it's cash.

Jeff said...

check out my brief write up on DRAM.

ShadowStock said...

ragnar

$1.31 on DRAM , nice going! I wasn’t buying DRAM today but was buying STMF.PK @1.01,1.00 and .98. STMF.PK is not a deep value stock in the Graham and Dodd tradition but more of a long term growth story with solid management. But if they don’t get financing they could be in trouble. Warren Kanders put STMF together. FORD (cash rich), SPRO and ITEX was also on my buy list today.

Regards
John

ShadowStock said...

Hi Jeff

Where can I find your write up on DRAM?

Regards
John

ShadowStock said...

JOB is another cash bargain; Price = .40, CASH – TTL LIAB = .55; CASH+ AR – TTL LIAB = .87; JOB is selling far below cash – liabilities but their business is facing serious economic struggles. I own shares

Jeff said...

hey,

thanks for the kind words on DRAM. I have been following JOB for a while, and have been afraid to pull the trigger on them for a while-they are hemorrhaging cash, have a terribly overpaid CEO, and with a slowing jobs market/frozen credit market.

I own some ITEX, FORD seems nice, as does SPRO. I am shocked at how many cash rich companies that there are. DCU, SWIR, ELST.OB ZINC, BWTL.OB, FEP, WSC, JEN and others come to mind.

The DRAM write up isn't so much analyzing the company, but is more of my amazement that there are actually such good deals out there right now.

http://ragnarisapirate.blogspot.com/

In case you couldn't tell by the blog name, I am the guy that has been commenting with the name "ragnar" for the past month or so.


keep up the good work.