False Profit

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    • Sun Nov 16th 22:33 PM
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      Rating: 0 0
      Commented on:
      Clean Harbors: Buying Trash Stocks
      Good luck buying a stock at 25x EPS when most others are trading at single digit PEs.
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    • Thu Nov 13th 07:51 AM
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      Rating: 0 0
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      Flowers Foods Delivers Tasty Q3 Earnings
      The company has generated zero free cash flow in the last twelve months, casting doubt on the quality of the reported earnings. And at 25x EPS, there is no room for error. This is a $20 stock at best.
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    • Thu Nov 13th 07:50 AM
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      Rating: 0 0
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      Almost Family Reports Healthy Quarter
      Take a look at the cash flow statement. Free cash flow is negative, with a huge increase in working capital, indicating the company is stretching to show earnings. And the stock trades at 25x EPS in this market. It's a $30 stock at best.
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    • Wed Nov 5th 08:18 AM
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      Rating: 0 0
      Commented on:
      Why Expeditors International Fits My Needs
      If a company trading at a 28x PE with 10% growth fits your needs, this is the stock for you!
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    • Mon Oct 27th 15:41 PM
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      Rating: 0 0
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      Equinix 3Q Results: Vade Retro, Recession
      EQIX is one of the few grossly overvalued stocks in this market. It hardly generates any profits, burns a huge amount of cash, hands out a liberal amount of stock and options to its executives, and trades at 4x revenues. The stock is essentially worthless, in my opinion, and one day when they can no longer raise any more debt, will have to file for bankruptcy. Until then, management will give rosy projections and merrily sell their stock to unsuspecting investors who evaluate it on non traditional metrics like proforma EBITDA.
      View article »
    • Mon Oct 27th 15:41 PM
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      Rating: 0 0
      Commented on:
      Equinix 3Q Results: Vade Retro, Recession
      EQIX is one of the few grossly overvalued stocks in this market. It hardly generates any profits, burns a huge amount of cash, hands out a liberal amount of stock and options to its executives, and trades at 4x revenues. The stock is essentially worthless, in my opinion, and one day when they can no longer raise any more debt, will have to file for bankruptcy. Until then, management will give rosy projections and merrily sell their stock to unsuspecting investors who evaluate it on non traditional metrics like proforma EBITDA.
      View article »
    • Wed Sep 24th 18:12 PM
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      Rating: 0 0
      Commented on:
      Neogen Corporation: An Organic Play on Globalization
      The macroeconomic analysis is all well and good, but perhaps you should also look at the valuation? The stock is trading at > 30x '08 EPS, most of the growth has come from acquisitions, and the co. has not generated any cash in the last 12 months. For a co. like this with poor earnings quality and zero free cash flow, I don't see why anyone would pay more than a 15x multiple. This looks like a $15 stock to me.
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    • Thu Sep 18th 08:43 AM
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      Rating: 0 0
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      CKE Restaurants: On a Roll in Tough Economic Environment
      Don't you think it was curious that they had a big drop in interest expense even though the debt level is up? The interest expense amounts to a 2% interest rate on their outstanding debt, which is abnormally low. The explanation can be found in their 10Q. The co. recognized a non-cash gain on interest rate swaps of $2Mn this quarter, which contributed all of the "beat". They had a similar situation last quarter too. In the past, when this item was a loss, the co. was quick to point it out. Now when it's a gain, they quietly sneak it in, and gullible investors lap it up.
      View article »
    • Thu Sep 18th 08:43 AM
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      Rating: 0 0
      Commented on:
      CKE Restaurants: On a Roll in Tough Economic Environment
      Don't you think it was curious that they had a big drop in interest expense even though the debt level is up? The interest expense amounts to a 2% interest rate on their outstanding debt, which is abnormally low. The explanation can be found in their 10Q. The co. recognized a non-cash gain on interest rate swaps of $2Mn this quarter, which contributed all of the "beat". They had a similar situation last quarter too. In the past, when this item was a loss, the co. was quick to point it out. Now when it's a gain, they quietly sneak it in, and gullible investors lap it up.
      View article »
    • Tue Sep 9th 08:28 AM
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      Rating: 0 0
      Commented on:
      Cooper Companies: In-line for '08, Positioned for Asian Growth
      Perhaps you didn't notice that the co. used an unusually low tax rate of 4% in their proforma figures for this quarter to arrive at a 67c profit. Using a normal 20% tax rate, EPS would have been 55c - a big miss from the 65c expectation. The company's earnings quality is poor with constant proforma exclusions for restructuring costs and the like. In fact, free cash flow over the last twelve months has been negative.
      View article »
    • Wed Sep 3rd 08:16 AM
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      Rating: 0 0
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      Hill International: A Play on Global Infrastructure Growth
      The company is trading at more than 30x EPS and 240x trailing FCF. Next year's estimates look like a pipe dream. A rich valuation and poor cash generation looks like a recipe for a disaster - this is an ideal short.
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    • Wed Sep 3rd 08:16 AM
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      Rating: 0 0
      Commented on:
      Hill International: A Play on Global Infrastructure Growth
      The company is trading at more than 30x EPS and 240x trailing FCF. Next year's estimates look like a pipe dream. A rich valuation and poor cash generation looks like a recipe for a disaster - this is an ideal short.
      View article »
    • Mon Aug 18th 08:44 AM
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      Rating: 0 0
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      Corrections Corp: Go Directly to Jail, Do Not Pass Go, Do Collect Big Returns
      This stock is trading at 22x EPS, and generating no cash. Free cash flow has been consistently negative, and getting worse. If anything, this looks like a good short to me.
      View article »
    • Tue Aug 12th 09:04 AM
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      Rating: 0 0
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      Steak N Shake's New Direction Is Terrific News for Shareholders
      For the trailing twelve months, SNS's free cash flow is about zero. So your projections look like a pipe dream. The company is raising cash by selling and leasing back properties, which provides a one-time boost to cash flow, but results in a higher operating expense on a continuing basis. The reality is that this is a company that is generating losses, showing decreasing revenue and has a fair amount of debt - usually the recipe for bankruptcy.
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    • Fri Aug 8th 13:05 PM
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      Rating: 0 0
      Commented on:
      Steak n Shake: Watching and Waiting as Biglari Names Himself CEO
      The company is unprofitable and burning cash with no sign of a turnaround. Bankruptcy is a possibility. Be generous and put a 0.5x multiple on revs, and this is a $5 stock.
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