Seeking cargo container homes Alpha
Dec. 6, 2012 11:46 AM ET | About: Textainer Group Holdings Limited (TGH) , Includes: BOX-OLD , TAL by: Albert Alfonso
Competitors to Textainer include TAL International Group (NYSE: TAL ) and Seacube Container Leasing (NYSE: BOX-OLD ). I prefer Textainer, due to its lower TTM PE and a higher return of equity than its competitors.
Textainer's shares have been in a rut since mid September. On September 19 the company sold 8.625 million shares via a secondary, increasing its float by more than 15%. 2.5 million of these shares were sold by Halco Holdings, which owns about 53.5% (29.8 million) of the shares outstanding. Since then, Textainer has traded in a narrow range between cargo container homes from about $28.00 to about $32.00. I believe the stock is about to break out of this range and head much higher. We can see from the chart below that the secondary in September was, volume wise, well above anything cargo container homes Textainer has seen. That day's volume was 30X the average daily volume for Textainer. The share price promptly dropped from about $34.50 to about $30.00.
Textainer's PE currently sits at 7.5. The company has been able to grow EPS at an average pace of 13.5% over the last 4 quarters. Its PEG using these numbers comes out to 0.42. Normally, a stock which trades below a 1.00 PEG ratio is considered undervalued. The share price for Textainer has only recently become disconnected with the TTM EPS.
Revenue for Textainer has also grown at a 21% pace over the last 4 quarters. Revenue cargo container homes growth has kept pace, even when accounting for the increased share count. The current disconnect between Textainer's revenue and current share price is a clear signal that the current share price is far too low.
Another compelling reason to buy and hold Textainer is for its generous dividend. The company has raised its dividend for 11 straight quarters. The current TTM payout ratio is below 40%. The company is well able to maintain and/or raise the dividend.
A common misconception about leasing companies is that their profitability is tied to shipping lines. cargo container homes This is untrue. Operating margin for the leasing companies has not been correlated at all with the shipping lines margins. (click to enlarge)
Shipping companies have needed cargo container homes to depend on lessors more since the financial crisis. The primary source of capital for shipping lines, such as European Banks, have been restricting lending. Shipping lines have also taken advantage of purchase leaseback agreements to lower capital expenditures flows while Textainer profits from these long term cash flows. cargo container homes YTD 2012, lessors have purchased 65% of container production. (click to enlarge)
I believe Textainer is currently undervalued cargo container homes by the market. A bounce back to $35.00 is likely since this is the level indicated by revenue and EPS growth. Over the last 2 trading days, Textainer has gained over 4%. I believe this is just the start and that Textainer will continue rising.
Disclosure: I am long TGH . 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 cargo container homes whose stock is mentioned in this article.
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 cargo container homes 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.
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Dec. 6, 2012 11:46 AM ET | About: Textainer Group Holdings Limited (TGH) , Includes: BOX-OLD , TAL by: Albert Alfonso
Competitors to Textainer include TAL International Group (NYSE: TAL ) and Seacube Container Leasing (NYSE: BOX-OLD ). I prefer Textainer, due to its lower TTM PE and a higher return of equity than its competitors.
Textainer's shares have been in a rut since mid September. On September 19 the company sold 8.625 million shares via a secondary, increasing its float by more than 15%. 2.5 million of these shares were sold by Halco Holdings, which owns about 53.5% (29.8 million) of the shares outstanding. Since then, Textainer has traded in a narrow range between cargo container homes from about $28.00 to about $32.00. I believe the stock is about to break out of this range and head much higher. We can see from the chart below that the secondary in September was, volume wise, well above anything cargo container homes Textainer has seen. That day's volume was 30X the average daily volume for Textainer. The share price promptly dropped from about $34.50 to about $30.00.
Textainer's PE currently sits at 7.5. The company has been able to grow EPS at an average pace of 13.5% over the last 4 quarters. Its PEG using these numbers comes out to 0.42. Normally, a stock which trades below a 1.00 PEG ratio is considered undervalued. The share price for Textainer has only recently become disconnected with the TTM EPS.
Revenue for Textainer has also grown at a 21% pace over the last 4 quarters. Revenue cargo container homes growth has kept pace, even when accounting for the increased share count. The current disconnect between Textainer's revenue and current share price is a clear signal that the current share price is far too low.
Another compelling reason to buy and hold Textainer is for its generous dividend. The company has raised its dividend for 11 straight quarters. The current TTM payout ratio is below 40%. The company is well able to maintain and/or raise the dividend.
A common misconception about leasing companies is that their profitability is tied to shipping lines. cargo container homes This is untrue. Operating margin for the leasing companies has not been correlated at all with the shipping lines margins. (click to enlarge)
Shipping companies have needed cargo container homes to depend on lessors more since the financial crisis. The primary source of capital for shipping lines, such as European Banks, have been restricting lending. Shipping lines have also taken advantage of purchase leaseback agreements to lower capital expenditures flows while Textainer profits from these long term cash flows. cargo container homes YTD 2012, lessors have purchased 65% of container production. (click to enlarge)
I believe Textainer is currently undervalued cargo container homes by the market. A bounce back to $35.00 is likely since this is the level indicated by revenue and EPS growth. Over the last 2 trading days, Textainer has gained over 4%. I believe this is just the start and that Textainer will continue rising.
Disclosure: I am long TGH . 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 cargo container homes whose stock is mentioned in this article.
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 cargo container homes 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.
More Bullish
Top Authors | RSS Feeds | Sitemap | About Us | Contact Us
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