9/23/2012

Oversold Small Cap Value with a Margin of Safety


There are still  many value ideas but most have moved higher with the rising market leaving them vulnerable . So for tonight I was looking for ideas that were crushed for the recent 1 week, 3 months and full year price returns. But I still wanted to make sure they provided some margin of safety.
Arkansas Best Corporation (ABFS):  Industry = Trucking
Arkansas Best Corporation (ABFS)is a freight transportation services company since 1923.
ABFS posted negative price returns over the prior 1 week (-10.21%), 1 month (-26.10%), and  YTD  (-60.30%) periods.

Enterprise to total assets less cash are at historical lows with EV/(Total Assets - Cash) for current quarter = .75, 2011 =  1.14, 2010 = 1.21, 2007 = 1.22

22% of the total assets less cash are receivables. Gross property plant and equipment is 1,077,307 or  111% of total assets - cash  and 49% if we use net PPE. Note that the company owns 122 terminal facilities along with their corporate headquarters along with offices in Wichita Falls Texas and Cherryville, North Carolina.  Most of these properties were acquired years ago with real estate value current market value. These properties are on the books at original cost.
Reason for pointing out these pieces of the total assets is to provide additional evidence of the assets value versus the current large discount to enterprise value of .40 = EV/(Total Assets-Cash).
Price to Book at .40 is at its low versus 2011= 1.1, 2010 = 1.40, 2009 = 1.50, 2008 = 1.20, 2007 = .90
Market Cap =  190.03M
EV = 285.21M
EV/EBITDA = 3.38
EV/Revenue = .15
Current Div Yield = 1.60%
ABFS ranks as the lowest valuation in its industry group (Trucking) using EV/GP = .15, P/S = .10, but it's the 2nd worst stock price performer in the Industry group.
52 Week high = 22.79  52 Week low = 7.42 Current Price = 7.42
Insider ownership = 10.91%
Institutional ownership = 83.40%
Short as a percentage of float = 9.90%
It won't be easy but at current prices there may be an opportunity.

2 comments:

SNAMIRI said...

ABFS @ $13.50 today, 5/6/13. Nice!

ShadowStock said...

Thanks. John