Player Avatar jboneparth (62.01) Submitted: 6/18/2008 6:17:32 PM : Underperform Start Price: $40.08 VE Score: +115.26

$25 billion debt. With a market cap of $28 billion. Yet profits only grew 9% last quarter.With $1 billion in profits each year, it would take around 15 years just to pay back all the debt. And that is if they eliminate their massive dividendYet they fund their growth and acquisitions by running up more debt. This company is completely mismanaged.A stock price of $45 is right around the corner...

Report this Post 3 Replies
Member Avatar DemonDoug (32.31) Submitted: 6/20/2008 3:36:03 PM
Recs: 11

Only 9% - in a contracting recessionary environment where a strong euro is unfavorable. I'd call that pretty damn good management.As for the debt, the profits are taken AFTER debts are paid. Revenues last quarter equaled $14.1B - likely a lot of that is going towards the debt load.The bear argument of too much debt is a fair one - in this type of environment it would probably be a good idea for them to slow down the acquisitions and focus on just growing what they have. But the growth story is way too robust to ignore. All factors are likely priced in at this point. The biggest danger? Overall market turbulence. Today, VE is down 2.03% as I'm looking at it while the S&P is down 2.10%. This means to me that VE might not hold up in the short term if the rest of the market continues to tank. If the S&P goes below 1200, a 45 price target is probably a good estimation.The question is however is the dividend fundable and maintainable - and I believe it is. A lot of people questioned PCU when it was yielding 12%, and it has held up remarkably and continues to do gangbusters. I believe VE is also in the solid category.Time will tell.

Member Avatar fxrfxr (< 20) Submitted: 2/18/2011 11:32:45 PM
Recs: 1

Time will tell and it sure did....

Member Avatar tnk4800 (< 20) Submitted: 8/24/2011 12:18:04 AM
Recs: 0

a lot of tremendous stocks have taken their turn getting beat down, take waste management for instance.

Featured Broker Partners