+ Watch DEXO
on My Watchlist
value play: P/E, P/Book
The new DexOne will emerge from the prepackaged bankruptcy with an opportunity to use free cash flow to pay down debt, shifting enterprise value from debt to equity holders in the process. As a bonus, the company will be buying back its own debt at a discount, as the 2017 bonds trade at a 55% discount to par. Dex One management is successfully growing digital revenue and profitability, and in 2017 the growth in digital should surpass the decline in traditional print media.
I have done well on this one before. Looks like my bet that it would keep declining at a low price backfired, as it has shot up in recent months. Still not a believer either way.
Thumbs down for too many reasons to list here, but I'll give you a few:1. Crappy business to be in unless your name is Google.2. There not even really in the business they claim to be. They claim to be some fancy kind of "digital-local marketing search optimization experts" when they're basically glorified phone-book publishers. Next year they'll say they're "textualized social media advertising experts in an ultra-red medium"3. Dodgy pension accounting. They use a 5.6% discount rate and an 8% expected return, yet a third of their pension assets are treasuries. Note that they use a 2.6% return when they calculate the value of awarded options4. A lot of debt is coming due in 1-3 years - that should be the final death knell for these guys.Of course the stock is pretty beaten down already, so if you had some faith in them evolving into an online search giant, (or Google's sidekick as they want you to think they are) then they might actually give you some returns, but I'm willing to bet against it.
Putting value stock guide to the caps test
This is a very risky investment. This is one of those rare stocks that will either make you a lot of money or leave you with a big tax write off. There is no in-between with this stock.I personally am betting that this company will go bankrupt and here is why -As you all know, this company has no economic moat. The industry the company operates in is also in an accelerated decline.The company has over 2.2 billion in long-term debt. So far the company has managed to cover its interest expense, however, considering the speed at which revenues and free cash flow are declining, I don't know how much longer the company will be able to do this.If revenues decline another 50+ percent as they did last year, the company will not be able to both cover its interest expense and pay down debt. So, in other words, the company is literally in a race against time to save itself from almost certain bankruptcy.If the company does manage to survive it could be one of the best turnarounds in a long time. Investors could easily make 5, 10 times their original investment or more. However, I believe this is very unlikely. I also don't think the company will get bought out considering its outdated business model, and the massive amount of debt on its balance sheet.It will be fun to see what happens with this stock over the next year. I'm betting the company will go bankrupt.
i put some real cash into this one. the debt looks good too (calculations below). i just think that things are overly hated in this industry.. also think china is overrated.. and will come down, i dont see this as a growth play but i do think that sentiment is overly negative.. perhaps some LBO will occur from someone who recapitalizes the company and sells them out into the market with less debt? who knows. it's all just a dream.2011 .12 2012 .24 2013 .24 2014 .24 = .84 if dexo saves itself. 2015 .24 2016 .24 2017 2.24 the most you'd get back for a dollar spent is $3.56
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