dennis mccain
  • Home
  • Investing
    • Dividend Kings
    • Div Aristocrats
    • Div Champions
    • Business Dev Cos
    • Monthly Dividends
  • Options
    • Weekly Options

Investing

Ideas and Strategies on Investing.

Previous Articles

CBS Update

7/29/2016

0 Comments

 
CBS is a media company that recently increased their dividend by 20%. For me, that's an eye catcher. Especially when it's on shares of a company I already own. So I thought it was time to re-look at the fundamentals of the company as see where it is today and decide if it's time to buy more.   
​
Picture

​CBS Corporation operates as a mass media company worldwide. The company operates through four segments: Entertainment, Cable Networks, Publishing, and Local Broadcasting. The Entertainment segment distributes a schedule of news and public affairs broadcasts, and sports and entertainment programming; produces, acquires, and distributes programming, including series, specials, news, and public affairs; operates online content networks for information and entertainment; and produces, acquires, and distributes theatrical motion pictures. The Cable Networks segment offers subscription program services, such as original series, theatrical feature films, documentaries, boxing and other sports-related programming, and special events; and owns and operates multiplexed channels. This segment also owns and manages Smithsonian Networks, which operates a channel featuring cultural, historical, scientific, and educational programs; and operates a CBS Sports Network, a 24-hour cable program service that provides college sports and related content. The Publishing segment publishes and distributes adult and children’s consumer books in printed, digital, and audio formats; develops special imprints and publishes titles based on the products; and delivers content and promotes its products on its own Websites, social media, and general Internet sites, as well as those related to individual titles. The Local Broadcasting segment owns 30 broadcast television stations; owns and operates 117 radio stations in 26 U.S. markets and related online properties; and operates local digital properties in various U.S. markets that combine the company's television and radio local media brands online to offer the latest news, traffic, weather, and sports information, as well as local discounts, directories, and reviews for local community. CBS Corporation was founded in 1986 and is headquartered in New York, New York. CBS Corporation operates as a subsidiary of National Amusements, Inc.
(Summary) (Company) (Chart)
CBS Corporation (CBS) declares an $0.18/share quarterly dividend. That's a 20% increase from the prior dividend of $0.15. The forward yield is 1.33%, and is payable on Oct. 1 for shareholders of record Sept. 9. Ex-div Sept. 7.
28 July 2016
Price $54.21
1yr Target $63.00
Analysts 1
Dividend $0.60
Payout Ratio 19.35%

1yr Cap Gain 16.21%
Yield 1.10%
1yr Tot Return 17.31%

P/E 17.47
PEG 1.02
Beta 1.88
EPS (ttm) $3.10
EPS next yr $4.41
Forward P/E 12.30
EPS next 5yr 17.18%
1yr Price Support $75.76

Market Cap $24.18 Bil
Revenues $14.24 Bil
Earnings $1.48 Bil
Profit Margin %

Quick Ratio 1.40
Current Ratio 1.60
Debt/Equity 1.50
1yr RevGR 0.57%
3yr RevGR 2.67%
5yr RevGR 0.61%

1yr EarnGR -45.17%
3yr EarnGR 6.46%
5yr EarnGR 22.67%

1yr DivGR 1.11%
3yr DivGR 10.77%
5yr DivGR 24.57%

ROA 6.30%
ROE 26.10%
​
My Perspective

Technically CBS has had a rough couple of years and has been moving sideways through a channel. In early 2014 it seemed to top out near $66 per share. Fifteen months later it topped out once again near $63 per share. And today it's pushing up on a theoretical resistance line near $60 per share. When it breaks through that I believe it could easily move up to $75 per share and increase at a 7.5% growth rate after that. 

I believe that at the current price of $54 per share, CBS is probably correctly priced for today's earnings. But as earnings continue in the years ahead, I expect the price of CBS shares to continue to move higher also. Add in the fact that the payout ratio is only 19% and the dividend could rise even faster than earnings.

I expect to continue to accumulate shares of CBS through dividend reinvestment, options selling and additional open market buys at favorable prices. Right now a favorable price would be nearer to $51 per share.   
Picture
0 Comments

LeMaitre Vascular

7/28/2016

0 Comments

 
LeMaitre Vascular is a leading global provider of innovative devices for the treatment of peripheral vascular disease. The company develops, manufactures, and markets disposable and implantable vascular devices to address the needs of vascular surgeons. Their diversified product portfolio consists of well-known brand name products used in arteries and veins outside of the heart. 
​
Picture

​LeMaitre Vascular, Inc. develops, manufactures, and markets medical devices and implants for the treatment of peripheral vascular disease worldwide. The company provides angioscope, a fiber optic catheter used for viewing the lumen of a blood vessel; carotid shunts to temporarily divert or shut blood to the brain during the removal of plaque from the carotid artery in a carotid endarterectomy surgery; and powered phlebectomy devices that enable less invasive removal of varicose veins. It also offers embolectomy catheters to remove blood clots from arteries or veins; occlusion catheters that temporarily occlude blood flow; and perfusion catheters that temporarily perfuse blood and other liquids into the vasculature. In addition, the company provides radiopaque tape, a medical-grade tape applied to the skin and provides interventionists to cross-reference between the inside and the outside of a patient’s body, and allows them to locate tributaries or lesions beneath the skin; and remote endarterectomy devices to remove severe atherosclerotic blockages from the arteries of the leg. Further, it offers valvulotomes for use as a bypass vessel to carry blood past diseased arteries to the lower leg or the foot; vascular grafts to bypass or replace diseased arteries; vascular patches used in conjunction with carotid endarterectomy, remote endarterectomy, and other vascular reconstructions; vessel closure systems that allows surgeons to attach vessels to one another by deploying titanium clips in place of suturing; and laparoscopic cholecystectomy devices to inject dye into the cystic duct during laparoscopic cholecystectomy. LeMaitre Vascular, Inc. markets its products through direct and indirect sales force, as well as distributors. The company was formerly known as Vascutech, Inc. and changed its name to LeMaitre Vascular, Inc. in April 2001. LeMaitre Vascular, Inc. was founded in 1983 and is headquartered in Burlington, Massachusetts.
(Summary) (Company) (Chart)
26 July 2016
Price $14.41
1yr Target $18.79
Analysts 7
Dividend $0.18
Payout Ratio 39.13%

1yr Cap Gain 30.39%
Yield 1.24%
1yr Tot Return 31.63%

P/E 31.60
PEG 1.71
Beta 0.38
EPS (ttm) $0.46
EPS next yr $0.57
Forward P/E 25.15
EPS next 5yr 18.50%
1yr Price Support $10.54

Market Cap $263.70 Mil
Revenues $79.70 Mil
Earnings $8.60 Mil
Profit Margin 10.79%

Quick Ratio 4.10
Current Ratio 5.90
Debt/Equity 0.00
1yr RevGR 10.20%
2yr RevGR 10.17%
3yr RevGR 11.24%
4yr RevGR 7.95%
1yr EarnGR 98.16%
2yr EarnGR 55.65%
3yr EarnGR 43.97%
4yr EarnGR 37.93%
1yr DivGR 14.28%
2yr DivGR 15.47%
3yr DivGR 16.77%
4yr DivGR 18.92%
ROA 9.70%
ROE 11.30%
​

The Peripheral Vascular Device Market
​
Based on industry statistics, it's estimated that peripheral vascular disease affects more than 20 million people worldwide and that the annual worldwide market for all peripheral vascular devices is approximately $4 billion. The disease encompasses a number of conditions in which the arteries or veins that carry blood to or from the legs, arms, or organs other than the heart become narrowed, obstructed, weakened, or otherwise compromised. In many cases peripheral vascular disease goes undetected leading to life-threatening events including stroke, ruptured aneurysm, pulmonary embolism or death. It's also estimated that the peripheral vascular disease market will grow due to the increase in the incidence and diagnosis rates of peripheral vascular disease, a shift by doctors to prescribing higher-priced endovascular devices, and the adoption of western healthcare standards by the developing world. LeMaitre's strong brands, established sales force, evolving suite of peripheral vascular device offerings, and broad network of vascular surgeon customers positions the company to capture an increasing share of this large and growing market.

Clinical studies have identified several factors that increase the risk of peripheral vascular disease, including smoking, diabetes, obesity, high blood pressure, lack of exercise, coronary artery disease, high cholesterol, and being over the age of 65. Demographic trends suggest an increase in the prevalence of peripheral vascular disease over time, driven primarily by rising levels of obesity and diabetes and an aging population.

It's estimated that there are more than 2,500 board-certified vascular surgeons and several thousand general surgeons who perform vascular procedures in the US and more than 3,000 vascular surgeons in Europe, Asia and the Pacific Rim. Vascular surgeons perform both conventional open vascular surgeries and endovascular procedures. Conventional open vascular surgery involves opening the body, cutting vessels, and suturing. Endovascular procedures typically are minimally invasive, catheter-based procedures involving repairing vessels from within using real-time imaging technologies. The company estimates that in 2015, 80% to 90% of their net sales were from devices used in open vascular procedures. 

Business Strategies

LeMaitre Vascular has grown by using a multi-pronged strategy: focusing on the vascular surgeon call point, competing for sales in low rivalry niche markets, and expanding their growth platform through a worldwide direct sales force as well as acquiring and developing complementary vascular devices.

Focused call point.  The company has historically directed their product offering and selling efforts toward the vascular surgeon, and estimates that in 2015 approximately 80% of their sales were to this type of customer. In contrast to other medical specialists, such as interventional cardiologists and interventional radiologists, vascular surgeons are uniquely positioned to be able to perform both conventional open vascular surgeries as well as minimally invasive endovascular procedures. This presents the company's core customer with an opportunity to gain market share against competing specialists while offering LeMaitre the ability to sell devices in both the open and endovascular markets to the same end user.

​Low rivalry niche segments. The company seeks to build and maintain leading positions in specific niche product segments. They believe that the relative lack of competitive focus on these segments by larger competitors allows them to establish both higher selling prices and higher market share gains in these markets. In addition the company has been selling complementary products such as the Omniflow biosynthetic graft in those larger and more competitive market segments, particularly when the company believes that their product offerings in that segment are highly differentiated.

Direct sales force expansion. The company sells their products primarily through a direct sales force in North America, Europe, Asia and the Pacific Rim. Since 1998 they have built their sales force from zero to 86 direct sales representatives. They intend to continue to expand their sales force in 2016. They also believe that direct-to-hospital sales build closer customer relationships, allow for higher selling prices and gross margins, and are not subject to the risk of customer loss related to distributor turnover. 

Addition of complementary products through acquisitions, research and development. The company intends to further expand and diversify their product offerings and add new technology platforms. Their significant experience in acquiring and integrating product lines and businesses is one of their competitive advantages. They evaluate the potential acquisition of additional product lines and businesses that are complementary to their product offerings, refine their current product lines, develop new applications for our existing technologies, and obtain regulatory approvals for their devices in new segments and geographies in order to further access to the broader peripheral vascular device market. 

Picture
Corporate Acquisitions and Key Product Lines

Medical Devices and Products
​
LeMaitre Vascular has a portfolio of 14 product lines, most of which are designed for use in open vascular surgery and address various anatomical areas including the carotid, lower extremities, upper extremities (for vascular access), aorta and other areas. In 2015, the carotid and lower extremities product lines comprised more than 10% of revenues. In 2015, the lower extremities product lines were 53% of revenues, while the carotid product lines were 29%. In 2014, the lower extremities product lines were 51% of revenues while the carotid product lines were 28% of revenues. In 2013 lower extremities product lines were 51% of revenues while the carotid product lines were 27%. The average selling price of valvulotomes, which are included in the lower extremities product lines, increased significantly in 2015 with the introduction of our 1.5mm HYDRO LeMaitre Valvulotome. No single product line accounted for more than 25% of our revenues in 2015, 2014 or 2013.

Angioscopes. The LeMaitre Disposable Angioscope is a fiberoptic catheter used for viewing the lumen of a blood vessel. It also provides direct visualization of valves during in-situ bypass procedures.

Balloon Catheters for Embolectomy, Occlusion and Perfusion. The LeMaitre line of embolectomy catheters are used to remove blood clots from arteries or veins. The company manufactures single-lumen latex and latex-free embolectomy catheters as well as dual-lumen latex embolectomy catheters. The dual-lumen embolectomy catheter allows clot removal and simultaneous irrigation or guide-wire trackability. Occlusion catheters temporarily occlude blood flow to allow the vascular surgeon time and space to complete a given procedure. Perfusion catheters temporarily perfuse blood and other fluids into the vasculature. The Pruitt line of occlusion and perfusion catheters reduces vessel trauma by using internal balloon fixation rather than traditional external clamp fixation.

Carotid Shunts. The Pruitt F3, Inahara-Pruitt, Flexcel and polyurethane carotid shunts are used to temporarily shunt blood to the brain while the surgeon removes plaque from the carotid artery in a carotid endarterectomy surgery. The Pruitt F3, Pruitt-Inahara, and polyurethane shunts feature internal balloon fixation that eliminates the need for clamps, thereby reducing vessel trauma. Our Flexcel shunt is a non-balloon shunt offered for surgeons who prefer to secure their shunt with externally placed clamps.

Powered Phlebotomy Devices. The TRIVEX powered phlebectomy system is comprised of capital equipment and disposables that enable less invasive removal of varicose veins. In this procedure, an illuminator is inserted through a small incision in the leg, enabling visualization of varicose veins. A second instrument removes the veins. Compared to conventional hook phlebectomy, this surgical procedure is faster and results in more complete vein removal through fewer incisions.

Radiopaque Tape. The VascuTape Radiopaque Tape is a flexible, medical-grade tape with centimeter or millimeter markings printed with our proprietary radiopaque ink that is visible both to the eye and to an x-ray machine or fluoroscope. VascuTape Radiopaque Tape is applied externally to the skin and provides interventionalists with a simple way to cross-reference between the inside and the outside of a patient’s body, allowing them to locate tributaries or lesions beneath the skin.

Remote Endarterectomy Devices. The EndoRE line of remote endarterectomy devices are used to remove plaque from arteries in the leg in a minimally invasive procedure requiring a single incision in the groin. Our EndoRE devices are used to separate the plaque from the vessel, cut the far end of the plaque to free it for removal, and then withdraw it from the vessel.

Valvulotomes. The 1.5mm HYDRO LeMaitre Valvulotomes, Over-The-Wire LeMaitre Valvulotomes, Tru-Incise valvulotomes, and LeMills Valvulotomes cut valves in the saphenous vein, a vein that runs from the foot to the groin, so the vein can function as an artery to carry blood past diseased arteries to the lower leg or the foot. Valvulotomes reduce costs for hospitals by enabling less invasive bypass surgery to be performed with several small incisions rather than one continuous ankle-to-groin incision, thereby reducing the length of hospital stays and the likelihood of wound complications.

Vascular Grafts. The AlboGraft woven and knitted vascular grafts are collagen-impregnated polyester grafts used to bypass or replace diseased arteries. They are available in both straight tube and bifurcated versions. The company's LifeSpan ePTFE Vascular Graft is an expanded polytetrafluoroethylene (ePTFE) graft used to bypass or replace diseased arteries and to create dialysis access sites. They are available in both regular and thin wall options and with an optional full or partial external spiral support. The stepped and tapered LifeSpan models are designed to reduce the risk of steal syndrome and high cardiac output, complications that may arise in dialysis access grafts. The Omniflow II Biosynthetic Vascular Graft is a composite of cross-linked ovine collagen with a polyester mesh endoskeleton. It is used to bypass or replace diseased leg arteries, and to create dialysis access sites.

Vascular Patches. The XenoSure Biologic Vascular Patch is made from bovine pericardium. In 2008, we obtained exclusive rights to distribute this product under our “XenoSure” brand in the United States, and in 2012, we exercised our option to acquire this product for worldwide distribution. The AlboSure Vascular Patch is a polyester patch. Vascular surgeons use patches in conjunction with carotid endarterectomy, remote endarterectomy, and other vascular reconstructions.

Vessel Closure Systems.  The AnastoClip AC and AnastoClip GC vessel closure systems allow surgeons to attach vessels to one another by deploying titanium clips instead of sutures. These vessel closure systems create an interrupted anastomosis which expands and contracts as the vessel pulses, which we believe improves the durability of the anastomosis.

Other Products. ​In some hospitals, vascular surgery procedures are performed by general surgeons. The company also sell general surgery devices, primarily laparoscopic cholecystectomy devices. The leading general surgery product is the Reddick Cholangiogram Catheter, which is used to inject dye into the cystic duct during laparoscopic cholecystectomy. In this procedure, the gall bladder is dissected and removed through small punctures in the abdomen. LeMaitre also offers a laparoscopic accessory used in laparoscopic gall bladder removal. 

My Perspective 

As a medical device company, this is a very small company. But it's also a company very focused on a specific medical procedure - vascular surgery - that continues to increase as the population continues to age. This becomes not only a life saving procedure, it's often performed as a preventive procedure for patients experiencing vascular disease.

Looking at the fundamentals above it's obvious that this is a great company producing great results. If there's a blemish at all it's the price. I would love to buy these shares at a price near $12 but I don't think that's going to happen. As recent as early July it sold for less than $14 per share so that could be considered about the best price I can expect to get. A high P/E or PEG can be expected with most medical products companies, and this is no exception. This is also a small company increasing its fundamentals at a pretty good pace and the investing community often affords a higher P/E to these companies.

Looking at the numbers above revenues are increasing approximately 10-11% per year pretty consistently. Earnings are increasing a little faster than that but it's a little skewed by 2015's earnings almost doubling. Up until that year earnings were increasing approximately 22% per year on a pretty consistent basis. Dividends are also pretty consistent, increasing in the mid to upper teens. With an expected five year estimated earnings growth rate of 18.5%, I would expect that dividends will continue to be increased at a similar rate. 

As a result, this company looks like it could be a very addition to my portfolio. I currently have no exposure to the medical device companies and this could be a nice company to start with. I expect to start a position in this company at this current price level and then add to that position on any subsequent pullback. I'll also use dividend reinvestment and the sale of call options to increase my position.  
 
Picture
0 Comments

Monro Muffler Brake

7/27/2016

0 Comments

 
Every car and truck needs periodic maintenance, and the more miles they've been driven the more likely that they're going to need to be repaired. For most drivers, returning to the dealer for routine maintenance and repairs after the warranty has expired tends to be expensive. And that's why independent repair shops like Monro Muffler Brake were created. Monro Muffler Brake is known for muffler and brake repair but they do so much more.  
​
Picture

​Monro Muffler Brake, Inc. provides automotive undercar repair and tire services in the United States. The company offers a range of services on passenger cars, light trucks, and vans for brakes; mufflers and exhaust systems; and steering, drive train, suspension, and wheel alignment. It also provides other products and services comprising tires and routine maintenance services, including state inspections. The company's maintenance services comprise oil change, heating and cooling system flush and fill' service, belt installation, fuel system service, and a transmission flush and fill' service. In addition, it replaces and services batteries, starters, and alternators, as well as offers air conditioning services. The company operates its stores under the brand names of Monro Muffler Brake & Service, Tread Quarters Discount Tire, Mr. Tire, Autotire Car Care Center, Tire Warehouse, Tire Barn Warehouse, Ken Towery's Tire & Auto Care, The Tire Choice, and Car-X. As of March 26, 2016, it had 1,029 company-operated stores, 135 franchised locations, and 14 dealer-operated automotive repair centers located in the northeastern and midwestern regions of the United States. Monro Muffler Brake, Inc. was founded in 1957 and is headquartered in Rochester, New York.
(Summary) (Company) (Chart)
24 July 2016
Price $64.42
1yr Target $70.57
Analysts 7
Dividend $0.68
Payout Ratio 34.00%

1yr Cap Gain 9.54%
Yield 1.05%
1yr Tot Return 10.59%

P/E 32.27
PEG 1.79
Beta 0.84
EPS (ttm) $2.00
EPS next yr $2.46
Forward P/E 26.16
EPS next 5yr 18.00%
1yr Price Support $44.28

Market Cap $2.09 Bil
Revenues $943.70 Mil
Earnings $66.30 Mil
Profit Margin 7.02%

Quick Ratio 0.20
Current Ratio 1.00
Debt/Equity 0.52
1yr RevGR %
3yr RevGR %
5yr RevGR %

1yr EarnGR %
3yr EarnGR %
5yr EarnGR %

1yr DivGR 13.33%
3yr DivGR 15.44%
5yr DivGR 13.56%

ROA 6.70%
ROE 12.90%
​
Picture
Operations and History

Monro is a chain of 1,029 Company-operated stores, 135 franchised locations and 14 dealer-operated stores providing automotive undercar repair and tire services in the US. At March 26, 2016, Monro operated Company stores in 25 states, including Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia and Wisconsin, primarily under the names ‘‘Monro Muffler Brake & Service’’, ‘‘Tread Quarters Discount Tire’’, ‘‘Mr. Tire’’, ‘‘Autotire Car Care Center’’, ‘‘Tire Warehouse’’, ‘‘Tire Barn Warehouse’’, ‘‘Ken Towery’s Tire & Auto Care’’, ‘‘The Tire Choice’’ and ‘‘Car-X’’. Company Stores typically are situated in high-visibility locations in suburban areas and small towns, as well as in major metropolitan areas. Company Stores serviced approximately 5.8 million vehicles in fiscal 2016. 

The predecessor to the Company was founded by Charles J. August in 1957 as a Midas Muffler franchise in Rochester, New York, specializing in mufflers and exhaust systems. The Company was incorporated in the State of New York in 1959. In 1966, the company discontinued their affiliation with Midas Muffler, and began to diversify into a full line of undercar repair services. An investor group led by Peter J. Solomon and Donald Glickman purchased a controlling interest in the Company in July 1984. At that time, Monro operated 59 stores, located primarily in upstate New York, with approximately $21 million in sales in fiscal 1984. Since 1984, the company has continued to grow and expand their marketing area to include 24 additional states.

Monro provides a broad range of services on passenger cars, light trucks and vans for brakes; mufflers and exhaust systems; and steering, drive train, suspension and wheel alignment. Monro also provides other products and services, including tires and routine maintenance services, including state inspections. Monro specializes in the repair and replacement of parts which must be periodically replaced as they wear out. Normal wear on these parts generally is not covered by new car warranties. Monro typically does not perform under-the-hood repair services except for oil change services, various ‘‘flush and fill’’ services and some minor tune-up services. Monro also does not sell parts or accessories to the do-it-yourself market.

All of the company’s stores, except Tire Warehouse and Tire Barn Warehouse stores, provide the services described above. Tire Warehouse and Tire Barn Warehouse stores only sell tires and tire related services and alignments. However, a growing number of these stores are more specialized in tire replacement and service and, accordingly, have a higher mix of sales in the tire category. 

On April 25, 2015, Monro acquired the Car-X brand as well as the franchise rights for 146 auto service centers from Car-X Associates Corp. 

Picture

​My Perspective

I like everything about this stock except the P/E ratio. It's higher than I generally like. I don't normally like to pay more than 20 times earnings for a company but some companies are so well liked by investors that their P/E ratio rarely gets that low. As can be seen in the chart above, that seems to be the case with Monro Muffler Brake. In fact today's P/E of 32 appears to be in line with the last three year average. 

With a 5 year forward earnings growth estimate of 18%, I'd really like to buy this stock on any pullback in price. Even with an estimated 23% increase in earnings next year, the P/E only falls to 26. Looking at the weekly chart, the lower Bollinger Band sits near 60 and there appears to be several resistance and support lines near 60. I believe that's about the best that could be asked for if trying to buy the stock. So just above that level would be my target and where I'd place my buy point. If that doesn't hit it in the next week or two, I'll move the buy point up as much as $2.

As I've mentioned in other articles I believe the economy is improving and the auto producers, dealers and parts manufacturers are finally starting to move higher. Monro Muffler Brake falls into the latter category and will benefit from this upswing. I intend to benefit from this upswing too.
   
Picture
Picture
0 Comments

Digirad Corporation

7/25/2016

0 Comments

 
Two sectors that have a bright future are technology and health care. Put them together and you might come up with some spectacular investments. Digirad is a technology and healthcare service provider specializing in diagnostic solutions and is organized in two main divisions, Diagnostic Services and Diagnostic Imaging.

The Diagnostic Services division provides services including cardiac event monitoring, nuclear cardiology and ultrasound imaging. These services are provided to physician practices, hospitals and imaging centers. This segment also provides client-centric services for nuclear cardiology camera owners such as staffing, outreach, outsourcing and administrative support.

The Diagnostic Imaging division develops and manufactures solid-state gamma cameras for nuclear cardiology and nuclear medicine applications, while it also repairs and supports Digirad equipment as well as equipment from most other manufacturers of nuclear cardiology systems.

Picture

​Digirad Corporation provides diagnostic solutions in the United States. The company operates in two segments, Diagnostic Services and Diagnostic Imaging. The Diagnostic Services segment provides in-office nuclear cardiology and ultrasound services, and cardiac event monitoring services to physicians who perform nuclear imaging, echocardiography, vascular or general ultrasound tests, or any combination of these procedures in their offices, hospitals, and imaging centers. The Diagnostic Imaging segment sells nuclear imaging cameras for nuclear cardiology and general nuclear medicine applications, as well as provides camera maintenance services to hospitals, imaging centers, physician offices, and mobile service providers. Digirad Corporation was founded in 1985 and is headquartered in Suwanee, Georgia.
(Summary) Company) (Chart)
20 July 2016
Price $5.79
1yr Target $7.50
Analysts 2
Dividend $0.20
Payout Ratio 12.19%

1yr Cap Gain 29.53%
Yield 3.45%
1yr Tot Return 32.98%

P/E 3.54
PEG 0.22
Beta 1.39
EPS (ttm) $1.64
EPS next yr $0.33
Forward P/E 17.82
EPS next 5yr 16.00%
1yr Price Support $5.28

Market Cap $112.50 Mil
Revenues $78.10 Mil
Earnings $32.50 Mil
Profit Margin 41.61%

Quick Ratio 1.20
Current Ratio 1.40
Debt/Equity 0.48
1yr RevGR 9.38%
3yr RevGR 6.32%
5yr RevGR 1.60%

1yr EarnGR 746.15%
3yr EarnGR ---
5yr EarnGR ---

1yr DivGR 0.00%
3yr DivGR 0.00%
5yr DivGR ---

ROA 44.40%
ROE 62.10%
​

​Operations
Picture
Digirad delivers convenient, effective, and efficient diagnostic solutions on an as needed, when needed, and where needed basis. They are one of the largest national providers of in-office nuclear cardiology and ultrasound services, and also provides cardiac event monitoring services. These services are provided to physician practices, hospitals, and imaging centers through their Diagnostic Services reportable segment. They also sell solid-state gamma cameras for nuclear cardiology and general nuclear medicine applications, as well as provide service on the products we sell through our Diagnostic Imaging reportable segment.

Digirad designed and commercialized the first solid-state nuclear gamma camera for the detection of cardiovascular disease and other medical conditions. Their imaging systems are sold in both portable and fixed configurations, and provide enhanced operability and improved patient comfort. Their nuclear cameras fit easily into floor spaces as small as seven feet by eight feet, and facilitate the delivery of nuclear medicine procedures in a physician’s office, an outpatient hospital setting, or within multiple departments of a hospital (e.g., emergency and operating rooms).

Through Diagnostic Services, the company offers a convenient and economically efficient imaging services program as an alternative to purchasing a gamma camera or ultrasound equipment or outsourcing the procedures to another physician or imaging center. For physicians who wish to perform nuclear imaging, echocardiography, vascular or general ultrasound tests, or any combination of these procedures in their offices, Digirad provides the ability engage their services, which includes the use of an imaging system, qualified personnel, and related items required to perform imaging in the their own offices and bill Medicare, Medicaid, or one of the third-party healthcare insurers directly for those services.

The flexibility of their products and services allow physicians to ensure continuity of care and convenience for their patients and allows them to retain revenue from procedures they would otherwise refer to imaging centers and hospitals. The imaging services are primarily provided to cardiologists, internal medicine physicians, and family practice doctors who enter into annual contracts for a set number of days ranging from once per month to five times per week.

Most of the imaging services are focused on cardiac care. Many of the company's physician customers are reliant on reimbursements from Medicare, Medicaid, and third-party insurers where, in the past, there has been downward price pressure and uncertainty of reimbursement rates due to factors outside the physicians’ control. Future changes and related impacts may require modifications to the company's current business model in order for our physician customers and Digirad to maintain a viable economic model.

With the acquisition of Telerhythmics, LLC (Telerhythmics) on March 13, 2014, Digirad broadened their suite of service offerings through the Diagnostic Services segment, enabling the provision of outsourced cardiac event monitoring services. Providing these services offers flexibility and convenience to the company's customers who do not have to incur the costs of staffing, equipment, and logistics to monitor patients as part of their standard of care. These cardiac event monitoring services are provided primarily through an independent diagnostic testing facility model which allows Digirad to bill Medicare, Medicaid, or one of the third-party healthcare insurers directly for services provided. As such, the company's cardiac event monitoring services are directly subject to reimbursements from Medicare, Medicaid, and third-party insurers, which are subject to changes on a periodic basis.

Digirad's Diagnostic Imaging segment revenue results primarily from selling solid-state gamma cameras and camera maintenance contracts. The company sells their imaging systems to physician offices and hospitals primarily in the US, with a small number of imaging systems sold internationally.

The company's main strategic focus is on growing their Diagnostic Services business, which they plan to accomplish by driving revenue density by providing additional service offerings, such as cardiac event monitoring and by increasing the company's overall number of customers through territory expansion and acquisition of other health care solutions companies. Recent acquisitions have included the acquisition of Telerhythmics on March 13, 2014, MD Office Solutions on March 5, 2015 (a provider of in-office nuclear cardiology imaging in the northern and central California regions) and DMS Health Technologies on January 1, 2016 (a provider of mobile healthcare solutions and a seller of medical equipment and services to small and regional hospitals).

The company expects the number of states served to double in 2016 compared to 2015 as a result of the DMS Health acquisition, and should significantly impact the company's future financial results. 

Market Opportunity

Nuclear Imaging. Nuclear imaging is a form of diagnostic imaging in which depictions of the internal anatomy or physiology are generated primarily through non-invasive means. Diagnostic imaging facilitates the early diagnosis of diseases and disorders, often minimizing the scope, cost, and amount of care required and reducing the need for more invasive procedures. Currently, the major types of non-invasive diagnostic imaging technologies available are: x-ray, magnetic resonance imaging (MRI), computerized tomography (CT), ultrasound, positron emission tomography (PET, which is a form of nuclear imaging), and nuclear imaging. The most widely used imaging acquisition technology utilizing gamma cameras is single photon emission computed tomography, or SPECT. All of the company' current cardiac gamma cameras employ SPECT technology.

Though the utilization rates of competing modalities such as CT, PET, and MRI, and diagnostic procedures such as CT angiography are high, SPECT procedures performed with gamma cameras are expected to continue to be used for a substantial number of cardiac-specific imaging procedures. The company believes that continued utilization of SPECT technology will be driven by patients having easier access to nuclear medicine services at physicians’ offices, lower purchase and maintenance costs, a smaller physical footprint, and easier service logistics of gamma cameras.

Clinical Applications for Nuclear Imaging. Nuclear imaging is used primarily in cardiovascular, oncology, and neurological applications. Nuclear imaging involves the introduction of very low-level radiopharmaceuticals into the patient’s bloodstream, which are specially formulated to concentrate temporarily in the specific part of the body to be studied. The radiation signals emitted by the radiopharmaceutical materials are then converted into an image of the body part or organ. Nuclear imaging has several advantages over other diagnostic imaging modalities, showing not only the anatomy or structure of an organ or body part, but also its function including blood flow, organ function, metabolic activity, and biochemical activity. Cardiologists as well as a number of internists and other physicians either purchase our nuclear cameras or subscribe to our Diagnostic Services services for in-office cardiac imaging for these advantages.

Ultrasound Imaging. Ultrasound imaging is a form of diagnostic imaging in which depictions of the internal anatomy are generated primarily through non-invasive means. Ultrasound imagers use sonar techniques to generate diagnostic images that facilitate the early diagnosis of diseases and disorders, often minimizing the scope and cost of care required and reducing the need for invasive procedures.

Clinical Applications for Ultrasound Imaging. Ultrasound is one of the most widely used imaging techniques in the United States. Ultrasound imaging is used primarily in obstetrics, internal medicine, cardiovascular care, and vascular health applications. Ultrasound imaging involves the transmission and detection of sound waves into and from a patient’s body. The sound waves transmitted by the ultrasound system are then converted into an image of the body part or organ.

Ultrasound imaging also shows the anatomy or structure of many internal organs or body parts, as well as key functional information including blood flow, wall motion, and organ function. Digirad's ultrasound services are used by cardiologists, internists, and other physicians for in-office echocardiography and general ultrasound imaging.

Cardiac Event Monitoring. Cardiac event monitoring is a diagnostic test that allows physicians to see the electrocardiogram (ECG) of a patient’s heart rhythm over a period of time or related to a specific event. The test includes a small monitor that is worn on the patient’s waist and is connected to lead wires affixed to the patient’s chest. The purpose of this test is to capture infrequent heart conditions that may only be experienced outside a physician’s office, as well as to observe the state of the heart in various resting and active situations.

Clinical Applications for Cardiac Event Monitoring. Cardiac event monitoring is a widely utilized cardiac test that provides clinical benefits in situations where the patient’s symptoms occur erratically or infrequently. Often symptoms can occur infrequently, but still be related to life-threatening cardiac conditions that need to be corrected. The use of a cardiac event monitor allows these symptoms to be captured and diagnosed, and ultimately corrected via prescription medications or use of invasive procedures, if required.

Our Imaging Services. Diagnostic Services offers portable nuclear and ultrasound imaging services. Digirad has obtained Intersocietal Accreditation Commission (IAC) and Intersocietal Commission for Echocardiography Laboratories (ICAEL) accreditation for their services. The company's nuclear modality services include an imaging system, a certified nuclear medicine technologist and a cardiac stress technician (often a certified or trained nurse or paramedic), the supply of radiopharmaceuticals, and required licensing services for the performance of nuclear imaging procedures under the supervision of physicians. Their licensing infrastructure provides the radioactive materials license, radiation safety officer services, radiation safety training, monitoring and compliance policies and procedures, and the quality assurance function, to ensure adherence to applicable state and federal nuclear regulations. The ultrasound imaging service is similar, in that Digirad provides the ultrasound equipment and an experienced ultrasound technologist to perform the service.

Digirad's portable nuclear imaging operations use a “hub and spoke” model in which centrally located regional hubs anchor multiple van routes in the surrounding metropolitan areas. At our Diagnostic Services hubs, clinical personnel load the equipment, radiopharmaceuticals, and other supplies onto specially equipped vans for transport to the physician’s office or other customer locations, where they set up the equipment for the day. After quality assurance testing, a technologist under the physician’s supervision will gather patient information, inject the patient with a radiopharmaceutical, and then acquire the images for interpretation by the physician.

Digirad provides nuclear and ultrasound services primarily under contracts for services delivered on a per-day basis. Under these agreements, physicians pay us a fixed amount for each day and they commit to the scheduling of a minimum number of service days during the contract term, which typically runs for one year, as well as a variable cost associated with the associated volume of patients utilizing our services and radiopharmaceuticals. The same fixed payment amount is due for each day regardless of the number of patients seen or the reimbursement or payment obtained by the physician, practice, hospital, or imaging center.

Our Cardiac Event Monitoring Services. Diagnostic Services also offers remote cardiac event monitoring services. These services include provision of a monitor, remote monitoring by registered nurses, and 24 hours a day, 7 days a week monitoring support for patients and physician customers.

Digirad offers modalities of: mobile cardiac telemetry (MCT), mobile cardiac event monitoring (both in wireless and analog versions), holter monitoring, and pacemaker analysis. The company's monitoring service operates out of a centralized monitoring center located near Memphis, Tennessee. From this location, the majority of monitoring equipment is shipped directly to patient homes once they are enrolled in our service. Patients hook up the equipment with easy to follow instructions, as well as assistance from our monitoring center. Once they are hooked up to the monitoring device, patients are monitored for a period of time ranging from 2 to 30 days. At the conclusion of the monitoring period, the equipment is packaged up and sent back to our monitoring center, after which the equipment is redeployed to the next patient.

Digirad provides their services under contracts with their customers that typically allow for direct billing to Medicare, Medicaid, or third-party private payors once the monitoring cycle is complete. Typically, contracts can be canceled at any time, and are generally present to create understanding on billing responsibilities.

Our Products

Digirad sells a line of nuclear imaging cameras for nuclear cardiology and general nuclear medicine applications. Cameras are used in hospitals, imaging centers, physician offices, and by mobile service providers. The central component of a nuclear camera is the detector, and it ultimately determines the overall clinical quality of the image a camera produces. The company's nuclear cameras feature detectors based on advanced proprietary solid-state technology. Solid-state systems have a number of benefits over conventional photomultiplier tube-based camera designs typically offered by the company's competitors. Digirad's solid-state technology systems are typically 2-5 times lighter and considerably more compact than most traditional nuclear systems, making them far easier and less costly to build, very reliable, and able to be utilized for mobile applications. Digirad is a market leader in the mobile solid-state nuclear camera segment.

Our Cardius family of dedicated cardiac SPECT solid-state imagers are noted for their compactness, portability, and unique upright imaging capabilities that make it possible to image patients up to 500 pounds in a sitting position. Upright imaging makes it possible to image large bariatric, chronic obstructive pulmonary disease (COPD), or claustrophobic patients that typically could not be imaged lying down on competitive systems. Digirad offers fixed dual-head and triple-head cardiac camera models for dedicated use within a facility, and portable configurations that make it possible to move the system to provide service to multiple rooms or sites. The Cardius® XACT SPECT/CT system features a triple-head design and a low dose volume CT attenuation correction methodology, making it possible to perform studies faster with greater interpretation diagnostic confidence. The XACT camera is sought by departments seeking to improve productivity, increase clinical accuracy, or employ new low dose clinical protocols.

​The ergoTM large-field-of-view imaging system is targeted to hospitals with multi-camera general nuclear medicine departments, academic centers, pediatric hospitals, regional trauma centers, women’s health centers, and cancer centers. Most general nuclear medicine departments have the need for a single-head planar portable camera for imaging patients more conveniently on hospital stretchers, for imaging patients that can not be moved, and for imaging patient’s at their bedside (pediatrics, intensive care units, critical care units, emergency rooms, surgical suites, women’s health clinics, or on regular patient floors). A single-head planar camera provides a more economical and convenient way to perform approximately 25% or more of all studies commonly performed in general nuclear medicine. It also opens the door to perform studies on critically ill patients in the patient’s room and the ability to perform molecular breast imaging protocols that offer new revenue generation potential while improving the standard of patient care. 

My Perspective

Digirad initially built up an infrastructure based on the assumption that the company would grow a lot faster than it has over the last few years. As a result, they've had to downsize their operations and earnings have taken a hit. But I think they may finally have things under control and may have finally right-sized the company for a future that includes expanding sale and subsequent expanding earnings. 

I also like that the company has continued to pay a dividend throughout this period even though revenues and earnings may not have been ideal. That tells me that management has faith in the future of the company. Hopefully in the future as earnings increase, so will the dividend. 

This is obviously a smaller company than I usually invest in but I really think there's potential for gains and a remote possibility that the company may be bought out one day by a larger health or technology company. With a price just over $5 per share, it's not hard to accumulate a few hundred shares of this company to see where it goes.
 
Picture
0 Comments

Group 1 Automotive

7/21/2016

0 Comments

 
Group 1 Automotive, Inc. is a Fortune 500 company, founded in 1985, and became public in 1997. It has its headquarters in the One Memorial City Plaza building in the Memorial City district of Houston, Texas. As of 2013, Group 1 became the third largest automotive retailer in the United States and as of 2016 the company owns 124 dealerships in 15 states across the USA, 18 in Brazil and 35 in the UK. The company is led by former Ford Motor Company executive, Earl J. Hesterberg.
​
Picture

​Group 1 Automotive, Inc. operates in the automotive retail industry. It sells new and used cars, light trucks, and vehicle parts; arranges vehicle financing; sells service and insurance contracts; and provides automotive maintenance and repair services. The company has operations primarily in the metropolitan areas of Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, Oklahoma, South Carolina, and Texas in the United States; 15 towns in the United Kingdom; and in metropolitan markets of Sao Paulo, Parana, and Mato Grosso do Sul, Brazil. As of December 31, 2015, it owned and operated 199 franchises, 152 automotive dealerships, and 35 collision centers that offer 32 brands of automobiles. Group 1 Automotive, Inc. was founded in 1995 and is headquartered in Houston, Texas.
(Summary) (Company) (Chart)
18 July 2016
Price $57.69
1yr Target $73.67
Analysts 7
Dividend $0.92
Payout Ratio 23.89%

1yr Cap Gain 27.69%
Yield 1.59%
1yr Tot Return 29.28%

P/E 15.00
PEG 0.86
Beta 1.60
​
EPS (ttm) $3.85
EPS next yr $8.01
Forward P/E 7.20
EPS next 5yr 17.40%
1yr Price Support $139.37

Market Cap $1.28 Bil
Revenues $10.81 Bil
Earnings $88.90 Mil
Profit Margin 0.81%

Quick Ratio 0.20
Current Ratio 1.10
Debt/Equity 3.14
​
1yr RevGR 6.99%
3yr RevGR 12.32%
5yr RevGR 14.05%

1yr EarnGR 8.33%
3yr EarnGR -2.34%
5yr EarnGR 13.28%

1yr DivGR 18.57%
3yr DivGR 11.92%
5yr DivGR 52.69%

ROA 2.00%
ROE 9.30%
​

New Vehicle Retail Sales

In 2015, Group 1 sold or leased 174,614 new vehicles in retail transactions at their dealerships, representing 32 brands. The retail sales of new vehicles accounted for 19.9% of the company's gross profit in 2015. 

Some new vehicles the company sells are purchased by customers under lease or lease-type financing arrangements with third-party lenders. New vehicle leases generally have shorter terms, bringing customers back to the vehicle market sooner than if the vehicle purchase was debt financed. In addition, leasing provides dealerships with a steady supply of late-model, off-lease vehicles to be sold as used vehicles. Generally, leased vehicles remain under factory warranty, allowing the dealerships to provide repair services for the contract term. However, the penetration of finance and insurance product sales on leases tends to be less than in other financing arrangements (such as debt financed vehicles).

Group 1 typically does not guarantee residual values on lease transactions. Lease vehicle unit sales represented 16.5%, 15.1% and 16.8% of our total new vehicle retail unit sales for the years ended December 31, 2015, 2014 and 2013, respectively. 

Used Vehicle Sales, Retail and Wholesale

Group 1 sells used vehicles at each franchised dealership. In 2015 the company sold or leased 124,153 used vehicles at their dealerships and sold 57,226 used vehicles in wholesale markets. The company's retail sales of used vehicles accounted for 11.7% of their gross profit in 2015. Used vehicles sold at retail typically generate higher gross margins on a percentage basis than new vehicles primarily because of their relatively limited comparability, which is dependent on a vehicle’s age, mileage and condition.

Valuations of used vehicles vary based on supply and demand factors, the level of new vehicle incentives, and the availability of retail financing and general economic conditions. Profit from the sale of used vehicles depends primarily on a dealership’s ability to obtain a high-quality supply of used vehicles at reasonable prices and to effectively manage that inventory. Group 1's new vehicle operations provides used vehicle operations with a large supply of generally high-quality trade-ins and off-lease vehicles, and are the best source of high-quality used vehicles. Group 1 dealerships supplement their used vehicle inventory with purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers. 

Parts and Service Sales

Group 1 sells replacement parts and provides maintenance and repair services at each of their franchised dealerships and provide collision restoration services at their 35 collision centers. Parts and service business accounted for 41.9% of the company's gross profit in 2015. Group 1 performs both warranty and non-warranty service work at their dealerships, primarily for the vehicle brands sold at a particular location. Warranty, customer pay, collision and wholesale accounted for 20.4%, 44.5%, 14.0% and 21.1%, respectively, of the revenues from the parts and service business in 2015. Parts and service departments also perform used vehicle reconditioning and new vehicle enhancement services for which they realize a profit. 

Finance and Insurance Sales
​
Revenues from the finance and insurance operations consist primarily of fees for arranging financing, and vehicle service and insurance contracts in connection with the retail purchase of a new and used vehicles. The finance and insurance business accounted for 26.6% of the company's gross profit in 2015. To increase transparency to their customers, Group 1 offers all of their products on menus that display accurate pricing allowing customers to choose the right products that suit their needs. 

Picture
0 Comments

Lithia Motors

7/20/2016

1 Comment

 
Lithia Motors, Inc. is a nationwide automotive dealership network headquartered in Medford, Oregon. It is the seventh largest automotive retailer in the United States, and ranked #14 in Fortune’s Most Admired Companies in 2013. Lithia Motors, Inc. ranked #602 on Fortune's top 1000 companies in 2014 list, up from a rank of #653 in 2013. In 2015, Lithia Motors broke into the Fortune 500 list at #482, making it one of only three Oregon-based companies in the Fortune 500. This followed a year that saw the acquisition of the DCH Auto Group, one of the 10 largest dealer groups in the country with 27 dealerships, before being purchased by Lithia Motors.
​
Picture

​Lithia Motors, Inc. operates as an automotive franchises and a retailer of new and used vehicles in the United States. The company operates through three segments: Domestic, Import, and Luxury. It sells new and used cars, replacement parts, service contracts, vehicle protection products, and credit insurance products; provides vehicle maintenance, warranty, paint, and repair services; and arranges related financing. As of February 26, 2016, the company offered 31 brands of new vehicles and various brands of used vehicles in 139 stores in the United States; and online through Lithia.com and DCHauto.com. Lithia Motors, Inc. was founded in 1946 and is headquartered in Medford, Oregon.
(Summary) (Company) (Chart)
18 July 2016
Price $82.39
1yr Target $102.40
Analysts 10
Dividend $1.00
Payout Ratio 14.43%

1yr Cap Gain 24.28%
Yield 1.21%
1yr Tot Return 25.49%

P/E 11.90
PEG 0.48
Beta 2.07
​
EPS (ttm) $6.93
EPS next yr $8.12
Forward P/E 10.15
EPS next 5yr 25.00%
1yr Price Support $203.00

Market Cap $2.10 Bil
Revenues $8.06 Bil
Earnings $182.60 Mil
Profit Margin 2.25%

Quick Ratio 0.20
Current Ratio 1.20
Debt/Equity 2.43
​
1yr RevGR 45.89%
3yr RevGR 32.97%
5yr RevGR 31.03%

1yr EarnGR 31.36%
3yr EarnGR 30.69%
5yr EarnGR 67.76%

1yr DivGR 25.00%
3yr DivGR 14.31%
5yr DivGR 31.95%

ROA 5.80%
ROE 22.90%
​
Background

Lithia Motors began in 1946 when Walt DeBoer opened a single car dealership in Ashland, Oregon. The first year the five person company sold 14 cars. In 1968, Walt's son, Sidney, took over the business and incorporated Lithia Motors. Sidney reorganized the business and in 1970 purchased a Dodge dealership in Medford. With this, Lithia’s base of operation moved to Medford and grew to a total of five stores with 19 franchises by 1990.

In December 1996 the company went public at $11 per share. By 2003 Lithia Motors had revenues of $2.5 billion from its 84 dealerships. By 2005 the company had increased its number of dealerships to 88.

In early 2007 the company began plans to build a new corporate headquarters in downtown Medford and a 60-acre auto mall north of downtown Medford. Three years later construction finally began. Lithia partnered with the Medford Urban Renewal Agency to create The Commons, a revitalization project that includes the headquarters and another $14 million in infrastructure and three park blocks paid for with MURA dollars. Lithia finally moved into their new headquarters in late 2012.

As of January, 2014, Lithia was operating 92 stores in 13 states. With the acquisition of the DCH auto group in late 2014, Lithia expanded to 139 stores in 14 states across the US, Hawaii, and Alaska.

Business Strategy and Operations

Lithia Motor's mission statement is: “Driven by our employees and preferred by our customers, Lithia is the leading automotive retailer in each of our markets.” The company offers customers convenient personalized service combined with the large company advantages of selection, competitive pricing and broad access to financing and warranties. Lithia Motors strives for diversification in their products, services, brands and geographic locations to manage market risk and to maintain profitability. The company has developed a centralized support structure to reduce store level administrative functions which allows store personnel to focus on providing a positive customer experience. With their management information systems and centrally performed administrative functions, Lithia Motors seeks to gain economies of scale from their dealership network.

The company offers a variety of luxury, import and domestic new vehicle brands and models, reducing their dependence on any one manufacturer. Encompassing economy and luxury cars, sport utility vehicles (SUVs), crossovers, minivans and trucks, the company believes that their brand mix is well-suited to what customers demand in the markets they serve. Their new vehicle unit mix is 54% import, 33% domestic and 13% luxury. This compares to the national market mix of 48%, 45% and 7%, respectively, for the year ended December 31, 2015. 

New Vehicles

In 2015, Lithia Motors sold 137,486 new vehicles, generating 23.8% of their gross profit for the year. New vehicle sales have the potential to create incremental future profit opportunities through certain manufacturer incentive programs, resale of used vehicles acquired through trade-in, arranging of third-party financing, vehicle service and insurance contracts, and future service and repair work.

In 2015, Lithia Motors represented 31 domestic and import brands ranging from economy to luxury cars, SUVs, crossovers, minivans and light trucks. 

The company purchases their new car inventory directly from manufacturers, who generally allocate new vehicles to stores based on availability, monthly sales and market area. Accordingly, the company relies on the manufacturers to provide them with vehicles that meet consumer demand at suitable locations, with appropriate quantities and prices. In addition, the company can exchange vehicles with other automotive retailers and between their own stores to accommodate customer demand and to balance inventory.

Used Vehicles 

At each new vehicle store, the company also sells used vehicles. In 2015, the company sold 99,109 retail used vehicles generating 20.5% of the company's gross profit. 

The company acquires used vehicles through customer trade-ins, purchases from non-Lithia stores, independent vehicle wholesalers and private parties, and at closed auctions. The company's near-term goal for used vehicles is to retail an average of 75 units per store per month. As of December 31, 2015, their stores sold an annualized average of 62 retail used units per month. Used vehicle sales represent a significant area for organic growth for the company. 

Vehicle Financing, Service Contracts and Other Products

As part of the vehicle sales process, Lithia Motors assists in arranging customer financing options as well as offering extended warranties, insurance contracts and vehicle and theft protection products. The sale of these items generated 24.1% of the company's gross profit in 2015 and arranged financing on 77% of the vehicles they sell.

The company believes that arranging financing is an important part of their ability to sell vehicles and related products and services. Their sales personnel and finance and insurance managers receive training in securing customer financing and possess extensive knowledge of available financing alternatives. The company attempts to arrange financing for every vehicle they sell and offer customers financing on a “same day” basis, giving the company an advantage, particularly over smaller competitors who do not generate enough sales to attract their breadth of finance sources. 

Service, Body and Parts

In 2015, the company's service, body and parts operations generated 31% of the company's gross profit. Their service, body and parts operations are an integral part of establishing customer loyalty and contribute significantly to their overall revenue and profits. Lithia Motors provides parts and service for the new vehicle brands sold by their stores, as well as service and repair most other makes and models.
​
The service and parts business provides important repeat revenues to their stores. Customer pay for vehicle service performed on vehicles that have fallen outside the manufacturer warranty period, repairs not covered by a manufacturer warranty, or maintenance and service on other makes and models. The company believes that increasing their product and service offerings for customers differentiates them from independent repair shops and dealerships with less scale. 

Picture
1 Comment

Penske Automotive Group

7/19/2016

0 Comments

 
Penske Automotive Group, Inc. is an international transportation services company that operates automotive and commercial dealerships principally in the US and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. Penske Automotive Group operates across three continents and five countries representing more than 40 world-class brands.
​
Picture

​Penske Automotive Group, Inc. operates as a transportation services company. The company operates through three segments: Retail Automotive, Retail Commercial Truck, and Other. It operates retail automotive and commercial vehicle dealerships principally in the United States and Western Europe; and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services primarily in Australia and New Zealand. The company engages in the sale of new and used motor vehicles; and related products and services, such as vehicle service and collision repair services, as well as placement of finance and lease contracts, third-party insurance products, and other aftermarket products. The company also operates 14 dealerships locations of heavy and medium duty trucks primarily under Freightliner and Western Star brand names, as well as offers a range of used trucks, and service and parts. In addition, it is involved in the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, and replacement and aftermarket automotive products. Further, the company distributes commercial vehicles and parts to a network of more than 70 dealership locations, including 3 company-owned retail commercial vehicle dealerships. As of December 31, 2015, it operated 355 automotive retail franchises, of which 181 franchises are located in the United States; and 174 franchises are located outside of the United States primarily in the United Kingdom. Penske Automotive Group, Inc. is headquartered in Bloomfield Hills, Michigan.
(Summary) (Company) (Chart)
18 July 2016
Price $35.47
1yr Target $48.86
Analysts 7
Dividend $1.08
Payout Ratio 28.95%

1yr Cap Gain 37.75%
Yield 3.04%
1yr Tot Return 40.79%

P/E 9.51
PEG 0.93
Beta 1.64
​
EPS (ttm) $3.73
EPS next yr $4.08
Forward P/E 8.70
EPS next 5yr 10.25%
1yr Price Support $41.82

Market Cap $3.02 Bil
Revenues $19.63 Bil
Earnings $332.80 Mil
Profit Margin 1.69%

Quick Ratio 0.20
Current Ratio 1.00
Debt/Equity 2.87
​
1yr RevGR 11.90%
3yr RevGR 14.18%
5yr RevGR 25.20%

1yr EarnGR 14.51%
3yr EarnGR 20.75%
5yr EarnGR 25.20%

1yr DivGR 19.51%
3yr DivGR 24.86%
5yr DivGR ---

ROA ---
ROE ---
​
Operations

Penske Automotive is an international transportation services company that operates automotive and commercial truck dealerships principally in the US and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. The company employs more than 22,000 people worldwide.

In 2015 the company generated $19.3 billion in total revenue which was comprised of $17.9 billion from retail automotive dealerships, $944.1 million from retail commercial truck dealerships and $444.5 million from commercial vehicle distribution and other operations.

Retail Automotive Dealership. Penske Automotive is the second largest automotive retailer headquartered in the U.S. as measured by the $17.9 billion in total retail automotive dealership revenue the company generated in 2015. As of December 31, 2015, Penske operated 355 automotive retail franchises, of which 181 franchises are located in the U.S. and 174 franchises are located outside of the U.S. The franchises outside the U.S. are located primarily in the U.K.

In 2015, Penske retailed and wholesaled more than 523,000 vehicles with 61% of our total automotive dealership revenues in 2015 generated in the U.S. and Puerto Rico and 39% generated outside the U.S. The company offers over 40 vehicle brands, with 72% of their retail automotive dealership revenue in 2015 generated from premium brands, such as Audi, BMW, Mercedes-Benz and Porsche. Each of their dealerships offers a wide selection of new and used vehicles for sale. In addition the company generates higher-margin revenue at each of their dealerships through maintenance and repair services and the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, and replacement and aftermarket automotive products. Automotive dealerships represented 92.8% of the company's total revenues and 91.0% of the company's total gross profit in 2015. 

Retail Commercial Truck Dealership. In November 2014, Penske acquired a controlling interest in a heavy and medium duty truck dealership group located primarily in Texas and Oklahoma which has been renamed Premier Truck Group (“PTG”). During 2015 Penske acquired an additional 5% of PTG bringing total ownership to 96%. 

PTG operates fourteen locations, including ten full-service dealerships offering primarily Freightliner and Western Star branded trucks. Two of those locations, Chattanooga and Knoxville, were acquired in February 2015. PTG also offers a full range of used trucks available for sale as well as service and parts departments, many of which are open 24 hours a day, seven days a week. This business represented 4.9% of the company's total revenues and 5.1% of the company's total gross profit in 2015.

Commercial Vehicle Distribution. Penske is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy and medium duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts across Australia, New Zealand and portions of the Pacific. This business, known as Penske Commercial Vehicles Australia, distributes commercial vehicles and parts to a network of more than 70 dealership locations, including three company-owned retail commercial vehicle dealerships.

In October 2014, Penske acquired MTU Detroit Diesel Australia Pty Ltd., a leading distributor of diesel and gas engines and power systems, principally representing MTU, Detroit Diesel, Mercedes-Benz Industrial, Allison Transmission and MTU Onsite Energy. This portion of the company has been renamed Penske Power Systems and it offers products across the on- and off-highway markets in Australia, New Zealand and portions of the Pacific. It also supports full parts and after-sales service through a network of branches, field locations and dealers. The on-highway portion of this business complements their existing Penske Commercial Vehicles distribution business.

These businesses represented 2.2% of our total revenues and 3.8% of our total gross profit in 2015. 

New Vehicle Retail Sales.

In 2015, Penske retailed 233,524 new vehicles which generated 51.5% of the company's retail automotive revenues and 27.1% of the company's retail automotive dealership gross profit. New vehicles are typically acquired by dealerships directly from the manufacturer. Our dealerships finance the purchase of most new vehicles from the manufacturers through floor plan financing provided primarily by various manufacturers’ captive finance companies.

Used Vehicle Retail Sales.

In 2015, Penske retailed 198,459 used vehicles, which generated 30.3% of their retail automotive revenue and 12.6% of the company's retail automotive gross profit. The company acquires used vehicles from various sources including auctions open only to authorized new vehicle dealers, public auctions, trade-ins from consumers in connection with their purchase of a new vehicle from us and lease expirations or terminations. To improve customer confidence in their used vehicle inventory, each of their dealerships participates in all available manufacturer certification processes for used vehicles. If certification is obtained, the used vehicle owner is typically provided benefits and warranties similar to those offered to new vehicle owners by the applicable manufacturer. Most of our dealerships have implemented software tools which assist in procuring and selling used vehicles. 

Vehicle Finance, Extended Service and Insurance Sales.

Finance, extended service and insurance sales represented 2.7% of our retail automotive revenue and 18.3% of our retail automotive gross profit in 2015. At the customers’ option, Penske can arrange third-party financing or leasing in connection with vehicle purchases and typically receive a portion of the cost of the financing or leasing paid by the customer for each transaction as a fee.

The company also offers their customers various vehicle warranty and extended protection products, including extended service contracts, maintenance programs, guaranteed auto protection, lease “wear and tear” insurance and theft protection products. The extended service contracts and other products that dealerships currently offer to customers are underwritten by independent third parties, including vehicle manufacturers’ captive finance companies. 

The company offers finance and insurance products using a “menu” process, which is designed to ensure that the company offers their customers a complete range of finance, insurance, protection, and other aftermarket products in a transparent manner. 

Service and Parts Sales.

Service and parts sales represented 10.2% of the company's retail automotive revenue and 41.6% of our retail automotive gross profit in 2015. The company generates service and parts sales in connection with warranty and non-warranty work performed at each of their dealerships. The company believes that their service and parts revenues benefit from the increasingly complex technology used in vehicles that makes it difficult for independent repair facilities to maintain and repair today’s automobiles.

The goal of each dealership is to make each vehicle purchaser a customer of the service and parts department. Dealerships keep detailed records of their customers’ maintenance and service histories, and many dealerships send reminders to customers when vehicles are due for periodic maintenance or service. The company also offer rapid repair services such as paint-less dent repair, headlight reconditioning, wheel repairs, tire sales and windshield replacement at most of our facilities in order to offer their customers the convenience of one-stop shopping for all of their automotive requirements. The company also operates 33 automotive collision repair centers.

Fleet and Wholesale Sales.

Fleet and wholesale sales represented 5.3% of the company's retail automotive revenue and 0.4% of our retail automotive gross profit in 2015. Fleet activities represent the sale of new units to customers that are deemed to not be retail customers such as cities, municipalities or rental car companies and are generally sold at contracted amounts. Wholesale activities relate to the sale of used vehicles generally to other dealers and occur at auction. Vehicles sold through this channel generally include units acquired by trade-in that do not meet certain standards or aged units. 

Picture
0 Comments

Bassett Furniture

7/17/2016

0 Comments

 
In late May I mentioned in an article titled "Residential Construction" that the homebuilders were showing up on my stock screens. Lately companies that create furniture  for the home and office are showing up on my stock screens. I find this to be a nice surprise because when the building industry is booming, the whole economy is usually booming. I intend to look at a few of these companies in the next few weeks and today I'll be looking at Bassett Furniture Industries. This weekend I may actually be visiting one of their showrooms, seeing their product lines, and talking to a few of the salesmen.

Picture

​Bassett Furniture Industries engages in the manufacture, import, and retail of home furnishings in the United States. The company operates in three segments: Wholesale, Retail, and Logistical Services. It is involved in the design, manufacture, sourcing, sale, and distribution of furniture products to a network of company-owned and licensee-owned Bassett Home Furnishings (BHF) retail stores, as well as independent furniture retailers; and wood and upholstery operations. As of January 21, 2016, the company operated a network of 93 stores, including 60 company-owned and 33 licensee-owned stores. It also provides shipping, delivery, and warehousing services to customers in the furniture industry. The company was founded in 1902 and is based in Bassett, Virginia.
​(Summary) (Company) (Chart)
17 July 2016
Price $26.11
1yr Target $31.00
Analysts 2
Dividend $0.36
Payout Ratio 23.68%

1yr Cap Gain 18.72%
Yield 1.37%
1yr Tot Return 20.09%

P/E 17.21
PEG 1.08
Beta 1.02
EPS (ttm) $1.52
EPS next yr $1.74
Forward P/E 14.98
EPS next 5yr 16.00%
1yr Price Support $27.84

Market Cap $282.51 Mil
Revenues $440.10 Mil
Earnings $16.60 Mil
Profit Margin 3.77%

Quick Ratio 1.20
Current Ratio 1.90
Debt/Equity .09
1yr RevGR 26.46%
3yr RevGR 16.72%
5yr RevGR 12.86%

1yr EarnGR 116.09%
3yr EarnGR -7.87%
5yr EarnGR ---

1yr DivGR 12.50%
3yr DivGR -31.24%
5yr DivGR ---

ROA 6.00%
ROE 9.30%
​
Picture

​My Perspective

This is the first of several home and office furniture companies I'll be looking at over the next few weeks so I'm not in any position to state what I'll do with this company in the coming weeks. What I especially like about this company is its ability to increase revenues at a rather quick pace while maintaining very low debt. I also think the P/E ratio is very reasonable. And although there's only two analysts following this company, the estimated one year total return on capital is rather nice and well above the threshold I normally require before I'll invest in a company. 

I temper this with the fact that the company has a small market capitalization (under one billion dollars) and erratic earnings and dividend growth. But with an expected five year earnings growth rate of sixteen percent and a growing dividend, this could earn a nice place in my portfolio.
Picture
0 Comments

Walgreens Boots Alliance Today

7/14/2016

0 Comments

 
The Walgreen Company is an American pharmaceutical company which operates the second-largest chain in the US behind CVS Health. It specializes in filling prescriptions, health and wellness products, health information and photo services. As of February 29, 2016, the company operated 8,177 stores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Its biggest competitor CVS operates more than 9,600 stores in 49 states, Puerto Rico, the District of Columbia, and Brazil.

The Walgreen Company was founded in Chicago, Illinois, in 1901 and today has its headquarters in the Chicago suburb of Deerfield, Illinois. In 2014, the company agreed to purchase the remaining 55% of Switzerland-based Alliance Boots that it did not already own to form a global business. Under the terms of the purchase, the two companies merged to form a new holding company, Walgreens Boots Alliance Inc., on December 31, 2014. 
​
Picture

​Walgreens Boots Alliance, Inc. operates as a pharmacy-led health and wellbeing company. The company operates through three segments: Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale. The Retail Pharmacy USA segment sells prescription drugs and an assortment of general merchandise, including non-prescription drugs, beauty products, photo finishing, seasonal merchandise, greeting cards, and convenience foods through its retail drugstores and convenient care clinics. It also provides specialty pharmacy services; and manages in-store clinics under the brand Healthcare Clinic. As of August 31, 2015, this segment operated 8,173 retail stores under the Walgreens and Duane Reade brands in the United States; and 7 specialty pharmacy locations, as well as managed approximately 400 Healthcare Clinics. The Retail Pharmacy International segment sells prescription drugs; and health, beauty, toiletry, and other consumer products through its pharmacy-led health and beauty stores, as well as through boots.com and BootsWebMD.com. It is also involved in optical practice and related contract manufacturing operations. This segment operated 4,582 retail stores under the No7, Boots Pharmaceuticals, Botanics, Liz Earle, Soap & Glory, and only at Boots brand names in the United Kingdom, Mexico, Chile, Thailand, Norway, the Republic of Ireland, the Netherlands, and Lithuania; and 637 optical practices in the United Kingdom. The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home healthcare supplies and equipment, as well as provides services to pharmacies and other healthcare providers. Walgreens Boots Alliance, Inc. was founded in 1901 and is based in Deerfield, Illinois.
(Summary) (Company) (Chart)
13 July 2016
Price $81.77
1yr Target $93.59
Analysts 23
Dividend $1.44
Payout Ratio 46.90%

1yr Cap Gain 14.45%
Yield 1.76%
1yr Tot Return 16.21%

P/E 26.64
PEG 2.00
Beta 1.10
EPS (ttm) $3.07
EPS next yr $5.00
Forward P/E 16.34
EPS next 5yr 13.30%
1yr Price Support $66.50

Market Cap $87.09 Bil
Revenues $116.53 Bil
Earnings $3.37 Bil
Profit Margin 2.89%

Quick Ratio 0.70
Current Ratio 1.20
Debt/Equity 0.63
1yr RevGR 35.41%
3yr RevGR 12.89%
5yr RevGR 8.93%

1yr EarnGR 100.00%
3yr EarnGR 18.03%
5yr EarnGR 13.53%

1yr DivGR 6.66%
3yr DivGR 9.29%
5yr DivGR 15.51%

ROA ---
ROE ---
​
Picture

​My Opinion

Walgreens Boots Alliance isn't cheap but I've been following it for a number of years and it never seems to be cheap. But if you look forward at the estimates, this company may not be as expensive as first perceived. The estimated forward P/E is only 16 and that's lower than it's been in a long, long time. But that's today's price compared to next year's estimated earnings (which may or may not be realized).

With a five year estimated earnings growth of just above 13%, I'd ideally like to buy this stock nearer to $66.50 per share. I'm not sure, however, if the stock will ever be price that low. So what I'll most likely do is start a position at this level and add additional shares on any pullback.  
Picture
0 Comments

Federal Signal

7/13/2016

0 Comments

 
Federal Signal Corporation is a global corporation that designs, develops and deploys solutions intended to protect people, property and the environment, but the company is best known for its variety of emergency lighting, sirens, industrial equipment, and public safety solutions. Other systems that they manufacture include sewer cleaners, vacuum trucks, street sweepers, waterblasters, safety and security systems. 
​
Picture

Federal Signal Corporation designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial, and commercial customers primarily in the United States, Europe, and Canada. It operates in two segments, Environmental Solutions Group and Safety and Security Systems Group. The Environmental Solutions Group segment manufactures and supplies a range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks, and water blasting equipment under the Elgin, Vactor, Guzzler, and Jetstream brand names. This segment also engages in the sale of parts, service and repair, equipment rentals, and training under the FS Solutions brand. The Safety and Security Systems Group segment provides systems and products for campus and community alerting, emergency vehicles, first responder interoperable communications, and industrial communications, as well as command and municipal networked security. This segment sells its products primarily under the Federal Signal, Federal Signal VAMA, and Victor brand names. The company sells its products through dealers, direct sales, and wholesalers and distributors, as well as independent foreign distributors. Federal Signal Corporation was founded in 1901 and is headquartered in Oak Brook, Illinois.
(Summary) (Company) (Chart)
11 July 2016
Price $13.52
1yr Target $14.00
Analysts 1
Dividend $0.28
Payout Ratio 28.86%

1yr Cap Gain 3.55%
Yield 2.07%
1yr Tot Return 5.62%

P/E 13.98
PEG 0.93
Beta 1.40
EPS (ttm) $0.97
EPS next yr $0.85
Forward P/E 15.85
EPS next 5yr 15.00%
1yr Price Support $12.75

Market Cap $839.59 Mil
Revenues $719.20 Mil
Earnings $61.30 Mil
Profit Margin 8.52%

Quick Ratio 2.00
Current Ratio 3.10
Debt/Equity 0.00
1yr RevGR -1.43%
3yr RevGR -1.47%
5yr RevGR 3.93%

1yr EarnGR 0.00%
3yr EarnGR ---
5yr EarnGR ---

1yr DivGR 188.88%
3yr DivGR ---
5yr DivGR 1.61%

ROA 9.70%
ROE 15.50%
​

Federal Signal Corporation, founded in 1901, was reincorporated as a Delaware corporation in 1969. The Company designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial and commercial customers. The Company’s portfolio of products includes sewer cleaners, vacuum trucks, street sweepers, waterblasters, safety and security systems, including technology-based products and solutions for the public safety market. In addition, they sell parts and provide service, repair, equipment rentals and training as part of a comprehensive offering to our customers. Federal Signal Corporation and its subsidiaries operate nine principal manufacturing facilities in four countries around the world and provide products and integrated solutions to customers in all regions of the world.

Operations 

Products manufactured and services rendered by the Company are divided into two major operating segments: the Environmental Solutions Group and the Safety and Security Systems Group. The individual operating businesses are organized as such because they share certain characteristics, including technology, marketing, distribution and product application, which create long-term synergies. Corporate contains those items that are not included in our operating segments. 

Environmental Solutions Group

The company's Environmental Solutions Group is a leading manufacturer and supplier of a full range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks and high-performance waterblasting equipment. Products are sold to both municipal and industrial customers under the Elgin, Vactor, Guzzler and Jetstream brand names. The Group manufactures vehicles and equipment in the United States.

Under the Elgin brand name, the Company sells a leading U.S. brand of street sweepers primarily designed for large-scale cleaning of curbed streets, parking lots and other paved surfaces utilizing mechanical sweeping, vacuum and recirculating air technology. Vactor is a leading manufacturer of vacuum trucks used to maintain sewer lines, catch basins and storm sewers, as well as hydro-excavation trucks to meet the need for safe and non-destructive excavation. Guzzler is a leader in industrial vacuum loaders used to manage industrial waste or recover and recycle valuable raw materials. Jetstream manufactures high pressure waterblast equipment and accessories for commercial and industrial cleaning and maintenance operations.

In addition to equipment sales, the Group engages in the sale of parts, service and repair, equipment rentals and training as part of a complete offering to its customers under the FS SolutionsSM brand.

Safety and Security Systems Group

The company's Safety and Security Systems Group is a leading manufacturer and supplier of comprehensive systems and products that law enforcement, fire rescue, emergency medical services, campuses, military facilities and industrial sites use to protect people and property. Offerings include systems for campus and community alerting, emergency vehicles, first responder interoperable communications and industrial communications, as well as command and municipal networked security. Specific products include vehicle lightbars and sirens, public warning sirens, general alarm systems, public address systems and public safety software. Products are sold under the Federal SignalTM, Federal Signal VAMATM and VictorTM brand names. The Group operates manufacturing facilities in the U.S., Europe and South Africa. 

Customers and Backlog

Total orders in 2015 were $686.1 million, of which approximately 47% were to U.S. municipal and governmental customers, 26% were to U.S. commercial and industrial customers and 27% were to non-U.S. customers. No single customer accounted for 10% or more of the Company’s business.

During 2015, the Company’s U.S. municipal and governmental orders decreased by 11% compared to 2014 levels, primarily attributable to fewer large fleet orders for street sweepers and sewer cleaners. During 2014, the Company’s U.S. municipal and governmental orders increased by 21% compared to 2013, primarily driven by improved orders of our street sweeper and sewer cleaner products and generally solid municipal demand.

During 2015, the Company’s U.S. commercial and industrial orders decreased by 30% from 2014, in large part due to lower vacuum truck orders, which were adversely impacted, directly and indirectly, by softness in oil and gas markets and, to a lesser extent, other industrial markets. During 2014, the Company’s U.S. commercial and industrial orders increased by 14% when compared to 2013 levels, largely attributable to higher orders of vacuum trucks, including hydro-excavation products.

During 2015, the Company’s non-U.S. orders decreased by 3% from 2014. This compared to an increase of 5% in non-U.S orders in 2014 versus 2013. Non-U.S. municipal and governmental markets are similar to the U.S. municipal and governmental markets in that they are largely dependent on tax revenues to support spending and orders may be subject to public-entity bid procedures. Of the Company’s non-U.S. orders received in 2015, there were approximately 41% from Canada, 26% from Europe, 17% from the Middle East and Africa and less than 10% from any other particular region.
​
The Company’s backlog totaled $171.3 million at December 31, 2015 compared to $254.7 million at December 31, 2014. Backlogs vary by Group due to the nature of the Company’s products and the buying patterns of its customers. The Environmental Solutions Group has experienced an average backlog that can range from four to five months of shipments and the Safety and Security Systems Group typically experiences an average backlog of approximately two months of shipments. Production of the Company’s December 31, 2015 backlog is expected to be substantially completed during 2016. 

Subsidiaries

Elgin. Recognizing the health hazards of inadequate street sanitation, Elgin, IL resident and inventor John Murphy designed the first motorized street sweeper in 1914. Since then, Elgin’s product line has grown to offer the latest sweeping technologies with Murphy’s original commitment to sustainability and the environment as the foundation of Elgin Sweeper’s mission.

FS Global Solutions. Federal Signal Global Solutions division is a leading supplier of communication and security equipment systems for offshore, marine, industrial and municipal facilities. Our intuitive systems include interoperable alerting and notification solutions with a modular design methodology that allows systems to be deployed separately or collectively.

FS Industrial. Federal Signal’s industrial product line is universally recognized as both the broadest and the most comprehensive with greater product selection and more design options. Federal Signal offers audible and visual signaling, outdoor warning, intercoms, public address, telephony, initiating systems, and more. In terms of complete and extensive product coverage, no one even comes close to beating Federal Signal. 

FS Public Safety Systems. It is Federal Signal’s commitment to engineer the most reliable and high-performing products possible for emergency and work truck vehicles. Federal Signal specializes in emergency and warning lights, sirens, in-car video, back-up cameras and alarms, directional lighting, and tire deflation devices.

FS Solutions. Staffed with skilled, factory-trained technicians, FS Solutions centers provide parts, service, and rebuilds for most makes and models of industrial vacuum loaders, vacuum excavators, and water blasters. We also offer a large selection of used and refurbished vacuum trucks, water blast rentals, OEM parts, automation tools, and a full line of job skills and safety training.

FS Vama. Federal Signal Vama is the European unit of Federal Signal Corporation with more than 30 years’ experience in providing solutions for emergency services, rapid response, and risk reduction. Federal Signal Vama is based in Spain and has regional sales offices in Great Britain, Italy, and Poland as well as a distributor network that services almost every country in Europe.

Guzzler. Guzzler Manufacturing has been building and improving vacuum loaders for over 40 years. Guzzler products are designed to vacuum and off-load a full spectrum of materials often in hard to reach areas – from solids and dry bulk powders to liquids, slurries, and thick sludge– in industrial areas such as cement plants, steel mills, railroads, oil refineries, chemical plants, foundries, and power-generating stations.

Jetstream. Jetstream, founded in 1976, has pioneered the development of many products that are now considered industry standards, such as the UNx® water blast pumps, replaceable cartridge for guns and control valves,  the Orbi-Jet™ self-rotating surface cleaning nozzle, and the Guardian water tank and filter system with an integrated design for extended system life and on-site operating time. 

Vactor. For more than 100 years, Vactor Manufacturing has provided customers around the world with a wide range of material handling equipment. Originally founded in Chicago in 1911 as the Myers-Sherman Company, a manufacturer of pneumatic farm equipment, Vactor Manufacturing has evolved to become the industry leader in sewer and catch basin cleaners, industrial vacuum loaders and vacuum excavators.

Victor. Victor Products Ltd is the world’s leading manufacturer of electrical connectors and LED lighting for the global coal mining industry. The solutions provided by Victor Products enable miners to advance safety measures and increase productivity.

My Perspective.

This company has two things going for it and that's just not enough incentive for me to get overly excited at this point. Those two things are its low P/E ratio and it's incredible asset ratios and zero debt levels. If those two things had been backed up by additional fundamentals this company may have ended up on my buy list. But with very little estimated one year total return based upon only one analyst, I just can't get behind this company at this point in time. 

Obviously it'll end up on my watch list but that's where it'll probably stay for now. At this point in time there's just too many other places to invest what little funds I have. Hopefully at some point in time this company will start to pull in a single direction higher and become a little more appealing to me. 

Picture
0 Comments
<<Previous
    Print Friendly Version of this pagePrint Get a PDF version of this webpagePDF
    Picture

    Author

    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.

    RSS Feed

    Picture
    Top 100 Blogs for Dividend Investors
    Picture
    Follow Me on StockTwits!


    Dividend Growth Stocks
    Dividend Growth Investor
    Picture
    I'm on Seeking Alpha too!

    Archives

    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013

    ADDITIONAL RESOURCES:
    4 Month INDU Chart
    Dividend Ex-Dates
    Bidness Etc
    SharpCharts Voyeur
    StockCharts.com
    FINVIZ
    Seeking Alpha
    BDC Reporter
    Roadmap2Retire
    DivHut
    Dividend Growth Investor
    Dividend Yield
    Stock Market Mentor
    Chart Swing Trader
    Dividend Announcements
    IBD TV
    Stocks to Watch Today
    Dividend Detective
    DISCLAIMER
     I am not a licensed investment adviser, and I am not providing investment advise for you on this site. Please consult with an investment professional before you invest your money. Any opinion expressed here should not be treated as investment advice. I am not liable for any losses suffered by any party because of data or information published on this blog. Past performance is not a guarantee of future performance. Unless your investments are FDIC insured, they may decline in value.
    Picture
Powered by Create your own unique website with customizable templates.