Integrated manufacturer and marketer of metal products for the building industry. The Company operates a number of manufacturing and distribution facilities in the United States and Mexico.
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Nonresidential construction industry is in the tank. Steel may not be a steal, but this one is approaching attractive long-term value camp.
Roughly 90 million in cash/ce; headcount reduction; survivor in a tough space whose value metrics including p/s, p/b and enterprise value suggest above average longer term value, although likely dead money for the next year.
Hey tenmiles, I was wondering if you could explain / go into any more detail about the value metrics that specifically spell out "above average longer term value" to you. For reference, here's NCS value measures from Yahoo:Market Cap (intraday): 169.58MEnterprise Value (20-Feb-09): 573.15MTrailing P/E (ttm, intraday): 2.13Forward P/E (fye 02-Nov-10): 4.84PEG Ratio (5 yr expected): 0.45Price/Sales (ttm): 0.12Price/Book (mrq): 0.33Enterprise Value/Revenue (ttm): 0.33Enterprise Value/EBITDA (ttm): 2.938What is enterprise value exactly? I guess I should go look it up.To me, the trailing and forward P/E look ridiculously low, as does P/S. P/B also seems low. Yahoo also says the book value per share is a whopping 31.612! Is the market punishing this stock simply because it has to do with construction in a recession? It hasn't traded this low since 1995...!One last thought is that the debt (~470 mil) looks high compared to market cap and equity. Are you sure this one's a survivor?Any and all thoughts appreciated if you have the time.-BFB
Hi Bear:This is a speculative CAPS selection. They could go bk, as they have a two slugs of debt coming due - one in the spring and another in November. if the credit markets remain frozen, they would likely need to refinance at higher rates, or maybe issue more shares (dilutive). My guess is that given their cash they will be able to refinance and stay in business. If so, I believe the stock is likely "cheap" in here, but it's not for the widows and orphansEnterprise value is the cost of buying the compnay "free and clear" - basically current market cap plus debt, as reduced by cash. Some value investors use a metric EV/EBIDTA to try and identify good turnaruond opportunities. Recently NCS traded at a EV/EBIDTA of around three, meaning it would only take 3 years to get all your money back if you bought the whole company - private equity often looks at this type of metric to spot deals. My general macro thought is that the credit markets will likely continue a very slow "thaw" over the next quarter (stock market, meanwhile, could easily drop another 1,000-1,500 pts). If so, NCS is a likely survivor and likely market beater for 3-5 year time horizon.
Tenmiles,Thanks so much for the reply... I may be looking to green-thumb this soon, as it's already significantly discounted from your pick. Though maybe that spells a market pricing for bk..? ;)Anyway, I had one last question that is fairly pertinent to the current market condition, and that is... how do you find out when a company's debt is coming due? Is there any easily accessible resource for this? Floridabuilder seems to use this somewhat often in his housing shorts, and it'd be nice to know whether my debt-based red thumbs are way off the mark time-wise.Thanks again!-BFB
Bear,I don't know where Tenmiles and Floridabuilder get their data, but in general you can check the current liabilities and accounts payable on the balance sheet to see what companies owe in the next year. Some companies will provide more detailed information in releases or on conference calls.
Is there any explanation why this stock's tanked so horribly? The P/E is 0.97!
Was it not able to refinance the afore mentioned debt? Did it have to issue more shares, diluting the value?
The latter is true spundun. From the SEC filing below. tenmiles, I would dump this or your points will go down if points matter. By holding this even at the current price of $2.20 you're playing with a stock with dilution that's now assuming the company will return to '04 happiness. While that may be true eventually in the interim this thing could drop like a rock and fast.
" As of September 4, 2009, we had approximately 19,981,585 shares of common stock issued and outstanding, excluding shares held by us as treasury stock. Assuming that we complete the restructuring and all outstanding convertible notes are tendered and accepted in this exchange offer or retired pursuant to the prepackaged plan, based on the number of shares of common stock authorized, issued and outstanding as of September 4, 2009, at the closing of, and after giving effect to, the restructuring:
• holders of convertible notes would receive 70,200,000 shares of common stock, or approximately 24.5% of our voting power;
• the CD&R Fund would receive 250,000 shares of Series B convertible preferred stock convertible into 196,109,194 shares of common stock based on the initial conversion price (assuming that we have sufficient authorized but unissued shares to permit such conversion, which, after giving effect to the restructuring, we do not expect to have (see “Summary—The Restructuring—CD&R Investment”)), or approximately 68.5% of our voting power;
• our current stockholders would continue to hold approximately 19,981,585 shares of common stock, or approximately 7.0% of our voting power."