SureWest Communications (NASDAQ:SURW)

CAPS Rating: 5 out of 5

A holding company whose operating subsidiaries provide a range of telecommunications, digital video, and other facilities-based communication services in Northern California, primarily in the greater Sacramento region.

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Member Avatar ScryingPool (< 20) Submitted: 4/12/2011 2:50:11 PM : Underperform Start Price: $14.51 SURW Score: +1.41

In addition to the high earnings forecasts for this company, consider the following negatives:

1.) DECLINING EPS (61% down forecasted over next 3 years). This signals planned dilution of shares to compensate its outrageous growth in equity, as stated next.

2.) VERY HIGH P/E RATIO. This firm has P/E of over 50 and is one of the highest I’ve seen so far this year in a micro-cap (danger=make or bust). This company is getting flooded with equity that it holds to a 62:1 with revenue, therefore…

3.) LOW ROI & ROA (both less than 1). However, I don’t know how ROE is greater than 1 given these. Can someone with a good financial/accounting background can explain?

4.) WITHIN 1% OF 52 WEEK HIGH (as I write this).

5.) LOW INSIDER HOLDINGS (LESS THAN 20%). Given the hype going around on this stock, I’m not very surprised. Perhaps the owners don’t have much money to invest, perhaps the astounding amount of equity pumped into this company has lowered the Insider to non-insider vested ratio, perhaps the owners don’t think or know that their own firm is going anywhere. All I can say with any manner of absolute certainty is that the last 3 major insider trades over the past 3 months have been SELL (see sec form 4 for SURW).

6.) LOW ASSET-TO-DEBT RATIOS. Current and quicks indicate that this company has some difficulty managing current and long term debt.

CONCLUSION: Such a micro-cap firm with a low present return on investment, high P/E ratio, and declining EPS all point to the fact that investors think this company is going to get big pretty soon. Either this firm's revenues will blow up and meet the $250m small cap status very soon or it will devalue just as quickly when investors realize they're carrying something that's not providing returns as fast as they speculated.

I predict high volatility for this firm, and where high volatility reigns, I bet on the bear.

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Member Avatar JerryDreamer (< 20) Submitted: 8/17/2009 1:30:03 AM : Underperform Start Price: $10.71 SURW Score: -0.73

When the overly optimistic FOMC says that household spending will be "constrained" by sluggish income growth, ongoing job losses, lower household wealth, and tight credit AND Shanghai stocks hit a seven-week low, then you know this bear market rally is finally over!

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Member Avatar tbrpicks (74.99) Submitted: 6/4/2009 1:48:47 PM : Outperform Start Price: $8.48 SURW Score: +43.22

Growing broadband market. Attractive price.

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Member Avatar hotaugustnights (< 20) Submitted: 7/29/2008 2:28:55 AM : Outperform Start Price: $9.39 SURW Score: +65.52

New technology and the hurting economy will drive people to stay at home more. People will play more on the internet and watch more tv. Surewest has a better product then the rest of the providers will be attractive to shoppers.

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Member Avatar keeppaddling (41.64) Submitted: 7/12/2008 7:00:44 PM : Underperform Start Price: $7.82 SURW Score: -113.42

Sold their most profitable line, their next most profitable is shrinking, and their growing business loses more money the bigger it gets. They haven't recognized their losses on auction rate securities, and their cash/credit position has caused them to discontinue their dividend.

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Member Avatar seanandnan (49.69) Submitted: 5/15/2008 6:28:18 PM : Outperform Start Price: $10.11 SURW Score: +70.16

Surwest has gotten hammered since eliminating their dividend as all the shareholders relying on dividend income have sold their stock. This company sold a slow growth part of their business last year realizing a $62 mil gain, sold their slow growth wireless unit for $60 mil and bought a KC triple play company earlier this year for over $150 mil in cash from those sales. That company is already accretive to their earnings. Doing a market cap analysis on this stock, at it's current price, the company is valued at less than they paid for the KC company. Also, at a price per customer basis, I conservatively value the company at around a $200 mil market cap. Valuation wise, this is thus a no brainer at $10 no matter how you analyze this stock...

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Member Avatar wirelesswanderer (83.12) Submitted: 11/7/2007 8:10:59 PM : Underperform Start Price: $19.65 SURW Score: +30.04

Sleepy little monopoly trying to diversify. If they'd look beyond the ranks of relatives for employees they might have a chance. Wireless division will be sold for the value of the spectrum at some point, that's something to look forward to.....

God help you if you run afoul of one of the landline original employees.

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Member Avatar rockonomics (95.19) Submitted: 11/7/2007 7:42:37 PM : Underperform Start Price: $19.65 SURW Score: +30.04

There is too much competition already in what they do. No matter how well this company can be managed barriers to entry will prevent them from growing big. Any success they have had so far is just a big billboard advertising areas where firms like Verizon should enter or undercut them.

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Member Avatar rmcbirney (97.70) Submitted: 10/25/2007 12:47:26 AM : Outperform Start Price: $23.17 SURW Score: -43.35

just because

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Member Avatar MotleyShark (97.50) Submitted: 1/5/2007 6:39:12 PM : Outperform Start Price: $24.89 SURW Score: -62.30

very impressive services, this micro cap will outperform, at least in short term

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