Shorts
may be over reaching with shares of GTI (GrafTech
International Ltd). 40.70% of the shares are short as a percentage of the
float. GTI,
GrafTech International Ltd offers graphite solutions on the most complex
applications for over 125 years.
It’s
far from perfect. There is enough value and potential catalysts to justify a
closer look as it’s down 26.47% over the prior 52 weeks versus the SP up 18.67%
over the same period.
For
tonight I would like to begin listing some of the positives based on the
current price of $7.01.
GTI has aggressively reduced share count over the past 4 quarters at what seems
like advantageous prices. On 03/31/2012 the share count was 144,499,000. This
balance was reduced to 134,833,000 for the most recently reported period,
03/31/13. That represents an 8.30% reduction in the float based on current float
share count of 116,890,000.The share price during this period were at
lows not seen since the 2008/2009 financial crisis.
Positive
2013 insider purchases were reported March 14,2013. Craig Shular company
officer purchased 40,000 shares for 292,800 or $7.32 per share. Lindon Robertson also purchased 14,000 shares
for 101,780 or 7.27 per share.
GTI trades at historical low valuations using P/B or P/S. Top line growth was positive with YOY revenue growth at
5%. Book value per share is 10.04. The stock price is currently trading at a
44% discount to book value. I don’t want to over emphasize this point but GTI owns about 16
properties in the USA and throughout the world. So given the company was
founded in 1886 it would be safe to say some of those properties are on the
books for far less than fair market value.
As one of the most shorted stocks this could be a
positive as these shares must be bought back and any good news could create a
positive selling event for longs.
Several
firms follow the stock. They have a bearish views. So contrarians may consider this
a positive as their current financial position can support obligations.
To be
fair there are many negatives:
gross
margins have been in a long decline along with the industry
assets
have been growing faster than revenues.
total debt
continues to climb over the past 3 years
aggressive
accrual accounting as supported by earnings lagging behind cash flow
Even with all the negatives GTI may be worth a closer look.
% Held by Insiders1: 12.77%
Market
Cap : 946.15M , Enterprise Value : 1.54B
Price/Sales: 0.76 , Price/Book: 0.71
Enterprise
Value/Revenue : 1.22 , Enterprise
Value/EBITDA : 6.60
Revenue
(ttm): 1.26B
Revenue
Per Share (ttm): 9.25
Qtrly
Revenue Growth (yoy): 5.30%
Gross
Profit (ttm): 315.80M
EBITDA
(ttm): 232.75M
Balance
Sheet
Total
Cash: 11.30M
Total
Cash Per Share (mrq): 0.08
Total
Debt (mrq): 566.65M
Total
Debt/Equity (mrq): 41.86
Current
Ratio (mrq): 4.05
Book
Value Per Share (mrq): 10.04
52-Week
Change: -27.40%
S&P500
52-Week Change: 18.12%
52-Week
High (Aug 8, 2012): 11.47
52-Week
Low (Mar 6, 2013): 6.41
% Held by Insiders1: 12.77%
% Held
by Institutions1: 93.80%
Short %
of Float (as of Jun 14, 2013)3: 40.70%
