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5
Player Avatar DarthWader (98.38) Submitted: 8/31/2007 5:35:47 AM : Underperform Start Price: $8.43 POL Score: +30.24

I see a lot of outperforms on this one but I think folks are missing the boat. Net margins are extremely low.. I mean in the low 3% range. Not surprisingly, for a company that does about 2.6B in sales there is only 80M in net income to show for it. Based on that the owner earnings are low 72M, which is only about .78 per share. Compare that to landec who earns 1.29 per share or Rogers Corp who earns 2.45 per share. Why would this matter more to Polyone than to comparables such as Landec or Rogers Corp? Because Poly is carrying a 550M debt load.. At this rate it will take them about 8 yrs to pay down that massive lt debt. Simply put, a 760M company with 560M in debt is not good. While competitors are allocating SFCF to R&D and other growth capex needs, Poly is spending a huge chunk of their valuable resources on interest payments. This company is also super diluted, with 93M shares out there. Its ps, ev/s, ev/ebitda are low but that is misleading. Take a look at the true pe for a clearer picture. In this case there is negative $5.38 dollars per share which then pumps up their pe to 34.8! Would you pay that kind of multiple for a company that has a roe of a 6.5% and a roa of 4.3%?? I wouldn't either.. There are clearly better places for your new/old money. Specifically, check out Landec and Rogers Corp, both of which would make fine additions to a small cap portfolio. Plastics, plastics everywhere!

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Member Avatar Peluche99 (44.27) Submitted: 6/16/2008 12:53:53 PM
Recs: 0

They are missing the boat, they better get the next one.

Member Avatar UltraContrarian (31.30) Submitted: 10/25/2009 10:54:27 PM
Recs: 0

Although this comment is 2 years old I completely agree. Historically they are a break even company in a crowded marketplace. The multiples the market is assigning are foolish.

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