Assets
Cash: $18M
Receivables due from customers less doubtful accounts: $204M
Inventory (at lower of replacement and fair value): $450M
Liabilities
Debt: $143M
Total Liabilities: $407
The company's cash+A/R+inventory less all liabilities add up to $265 million. Note that this barebones minimal valuation excludes the company's relationships with customers, its manufacturing facilities, and other intangibles which make this a profitable company. Yet as recently as Monday, the company traded with a market cap of just $120 million!
Though we cannot predict which companies will beat/miss analyst expectations by a few pennies, we can still determine which ones have minimal downside and plenty of upside. The AM Castles in this market are a-plenty, for those who are willing to search, analyze, and invest against the prevalent fear that persists in today's market.
Disclosure: Author has a long position in CAS
3 comments:
i am a student frm india and i am learning a lot about value investing by the way of reading ur blog.i am very grateful for that.
usually people dont talk much abt the balance sheet stuff like the pension liabilities, operating leases which are a way of hiding liabilities. i believe that the frachise value of the business is important but balance sheet cant be ignored for that matter. i have been reading a book called "hidden financial risk:understanding off-balance sheet liabilities".
Current bear market has once again made ppl realize that balance sheets are important.
keep blogging...its a learning tool for me
Hi Sandy,
I agree, the industry is mostly focused on earnings prospects, but ignores B/S strength/weakness which offers us some great opportunities.
Thanks for the kind words!
I hope they will keep focusing on earnings for a long time!
Post a Comment