Unfortunately I can't see anything but a significant write down in assets for CLH in the coming 6-12 months. I can post detail another time but as indicated previously nothing I do gets vaguely close to carrying value. If I'm right then will see negative eps, potential banking covenant issues depending on the size of write down (not exactly sure of the detail of those on the $119m debt pile) and the issues that result. Perhaps I'm wrong but if so please provide factual analysis as presently can't see objective evidence to the contrary. Would love to see alternate views.
Assuming no debt issues then I can't see a value/share in excess of $0.85 and actually see scenarios much lower. If you don't like my view that's fine, but before you disagree add up the 16.5years of operating cash flow achieved (incl pal purchases) to see how much free cash flow from operations per year as a backdrop. Then as a separate exercise estimate using observed past multiple trends the cash flows to come from current pdl portfolio, subtract collection costs and tax and then discount for a reasonable rate of return and see what you get. Then add what you think positive cash flow (after costs etc) from other collection services are and apply a generous earnings multiple just to be generous. Add some sort of earnings from future pdl purchases ( as let's assume they continue to buy, even add a little growth if you like) net of costs at a reasonable multiple.Then subtract $119m of debt and divide all by the number of shares. Personally I can't get close to $1.03/share.
Personally I'm tempted to short at these levels not go long. In the interests of open disclosure I currently have no position though.
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