2/21/2011

Revenue used as key valuation metric

JVA and UACL are far from perfect but the market maybe ignoring the current disconnect from fair price based on intrinsic and comparative valuations.

Some of the additional attributes used to help find new ideas are mentioned below. The search started by looking at the EV/Revenue averages from 2005 to 2009. I then ranked the % ratio improvement based on the current EV/Revenue versus the average (2005 to 2009). The next step was only to further investigate those names with a current EV/Revenue less than 2009’s measure.

Balance sheet strength was also captured by selecting only companies with an EV/Market capitalization < 1.40. The names also needed to show an improving capital structure. Shares outstanding and /or debt reduction from 2005 to the TTM.

Quarterly year over year revenue growth

EV/Revenue < .50

52 week negative price change.
Both ideas face rising commodity prices.

UACL

Tomorrows rising oil prices may move the stock lower.

Universal Truckload Services, Inc. (UACL) is a truckload motor carrier in the U.S. and Canada.

Higher gas prices will make value improvements challenging. So the idea is not without obvious risk but if profits normalized the stock should move significantly higher.

Enterprise value is 275 million with a market cap of 247 million. Insiders own 62% and shorts as a percentage of the float is 3%.

ROIC for the TTM was 7.47%. ROIC for 2005 and 2006 was 25.56%, 16.90% respectively. ROIC mean reversion is a possibility to move the price higher.

Gross Margins for 2005 to TTM have improved from 22.28 (2005) 23.24 (2006), 23.56 (2007),21.93 (2008),24.88 (2009) and the TTM 24.07%

Book Value per share for 2005 to TTM has improved from 7.36 (2005) 8.23 (2006), 9.39 (2007),10.23 (2008),9.66 (2009) and the TTM 10.25.The stock price has not correlated with the improved book value,

52 week Change -5%

YOY quarterly revenue change = 21.80%

EV/Revenue = 45.48% or .4548

2009 EV/Revenue = .5239

Average EV/Revenue 08 to 06 = .5440

Capital structure improvements;

Share count was 16,159,000 for 2006 versus the TTM balance of 15,966,250 fully diluted.

Total liabilities was 56,447,000 for 2006 was reduced to 47,186,000 for the TTM

Conclusion; Universal Truckload Services, Inc. (UACL) faces a tough environment but warrants a closer look.


JVA: Coffee Holding Co

Originally mentioned on the link
http://shadowstock.blogspot.com/search?q=jva

Total liabilities were 13,154 for 2008 reduced to a 2010 balance of $10,711. The total liabilities did increase from the $7,640 balance in 2006.

Diluted shares outstanding were 5,599,830 at 2006 reduced to 5,468,439 for the current balance.

Insiders hold 53%.ROIC was impressive for the TTM @ 17.24%.

TTM EBITDA = 4,490,000 but operating from continuing operations was 2,839,000.

OI from continuing operations – Average Capital expenditures over the past 4 years/EV = 2,839,000/308,487,000 = .0823 or 8.23%

EV = 30,487,800

Capital expenditures averaged 393,000 from 2007 to 2010

Current dividend yield is 3.00%

Long JVA as part of a highly diversified value based portfolio in the tradition of Ben Graham

1 comment:

Anonymous said...

thanks for this tips