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Jul. 9, 2013 10:18 AM ET | About: Textainer Group Holdings Limited (TGH) by: Andrew Smith
Textainer Group Holdings Ltd. (NYSE: TGH ) presents a unique value proposition in a market where many stocks have stretched valuations. TGH has a simple business, high dividend yield, low price-to-earnings multiple, and strong revenue growth. Simple Business
Textainer states that it is the "world's largest lessor of intermodal containers based on fleet size." Textainer purchases intermodal containers by utilizing its relatively low cost of capital. Textainer leases shipping container homes the containers to shippers, an industry that has experienced poor access to credit markets to fund the capital expense of purchasing containers. Textainer also buys and resells used containers all over the world and has a single source contract to lease intermodal equipment to the U.S. military's Surface Deployment and Distribution Command shipping container homes (SDDC). Dividend Yield
Textainer pays a 46 cents/quarter dividend, which produces a 5.13% yield on the stock's current price. Textainer has raised the dividend for 13 consecutive quarters, doubling it from 23 cents over that period. Despite the impressive dividend growth, the most recent quarter's distribution still only represented 57% of the company's adjusted net income.
Textainer currently trades at a price-to-earnings multiple of 8.98. The chart below shows Textainer's historical P/E since it became publicly traded in 2007. The current valuation shipping container homes provides an excellent entry point. Textainer's P/E also compares favorably from a value prospective to the Dow Jones Transportation Index (DJT), which currently has a frothy shipping container homes P/E of 21.51 .
Textainer's 2012 revenue of $487 million was more than double its 2009 revenue of $239 million. Although Textainer's rate of revenue growth is slowing, the company still reported a 9.6% increase over the prior year quarter in its last quarter. Credit Suisse expects Textainer's shipping container homes revenue to be $534 million shipping container homes this year, $597 next year, and $650 million in 2015.
Textainer recently announced a new investment that will be an opportunity for future growth in addition to its traditional business lines. Textainer has partnered with Trifleet Leasing, which will acquire intermodal tank containers for Textainer. Intermodal tank containers are used to transport the storage of liquid food, chemicals, and gases. Trifleet will continue to utilize its expertise as a leading tank container lessor and lease the containers for Textainer. Summary shipping container homes
In July 2012, I made the bull case for Textainer shortly after it reached an all-time high of $39.35 and was trading at $37.42. After peaking at $43.96 shipping container homes on Feb. 12 of this year, Textainer's stock has retreated back to an appealing price below $35. I recommend initiating or expanding a position in this company with a simple business and both value and growth attributes.
Disclosure: I am long TGH , and I will likely purchase additional shares over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
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Jul. 9, 2013 10:18 AM ET | About: Textainer Group Holdings Limited (TGH) by: Andrew Smith
Textainer Group Holdings Ltd. (NYSE: TGH ) presents a unique value proposition in a market where many stocks have stretched valuations. TGH has a simple business, high dividend yield, low price-to-earnings multiple, and strong revenue growth. Simple Business
Textainer states that it is the "world's largest lessor of intermodal containers based on fleet size." Textainer purchases intermodal containers by utilizing its relatively low cost of capital. Textainer leases shipping container homes the containers to shippers, an industry that has experienced poor access to credit markets to fund the capital expense of purchasing containers. Textainer also buys and resells used containers all over the world and has a single source contract to lease intermodal equipment to the U.S. military's Surface Deployment and Distribution Command shipping container homes (SDDC). Dividend Yield
Textainer pays a 46 cents/quarter dividend, which produces a 5.13% yield on the stock's current price. Textainer has raised the dividend for 13 consecutive quarters, doubling it from 23 cents over that period. Despite the impressive dividend growth, the most recent quarter's distribution still only represented 57% of the company's adjusted net income.
Textainer currently trades at a price-to-earnings multiple of 8.98. The chart below shows Textainer's historical P/E since it became publicly traded in 2007. The current valuation shipping container homes provides an excellent entry point. Textainer's P/E also compares favorably from a value prospective to the Dow Jones Transportation Index (DJT), which currently has a frothy shipping container homes P/E of 21.51 .
Textainer's 2012 revenue of $487 million was more than double its 2009 revenue of $239 million. Although Textainer's rate of revenue growth is slowing, the company still reported a 9.6% increase over the prior year quarter in its last quarter. Credit Suisse expects Textainer's shipping container homes revenue to be $534 million shipping container homes this year, $597 next year, and $650 million in 2015.
Textainer recently announced a new investment that will be an opportunity for future growth in addition to its traditional business lines. Textainer has partnered with Trifleet Leasing, which will acquire intermodal tank containers for Textainer. Intermodal tank containers are used to transport the storage of liquid food, chemicals, and gases. Trifleet will continue to utilize its expertise as a leading tank container lessor and lease the containers for Textainer. Summary shipping container homes
In July 2012, I made the bull case for Textainer shortly after it reached an all-time high of $39.35 and was trading at $37.42. After peaking at $43.96 shipping container homes on Feb. 12 of this year, Textainer's stock has retreated back to an appealing price below $35. I recommend initiating or expanding a position in this company with a simple business and both value and growth attributes.
Disclosure: I am long TGH , and I will likely purchase additional shares over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
AUM Select AUM $1B+ 750M-1B 250-750M 100-250M 50-100M 10-50M 1-10M 500k-1M 100-500k 0-100k (Assets under Management)
Thank you for your interest in Seeking Alpha PRO Our PRO subscription service was created for fund managers, and the cost of the product is prohibitive for most individual investors. PRO Alerts is our flagship product for individual investors who want to be faster and smarter about their stocks. To learn more about it, click here. If you are an investment professional with over $1M AUM and received this message in error, click here and you will be contacted shortly.
This article has comments. shipping container homes To read them or add your own, click here .
(Click to add stocks to your portfolio)
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