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Home Value Stock Idea BPSG – what appears to be less than cash? Can anyone help me read this?

BPSG – what appears to be less than cash? Can anyone help me read this?
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2:23 pm
December 29, 2009


eric_2003

Member

posts 19
4

Thank you both for the great replies. The Valuengine guy is a finance professor but they get at their value based on P/E and PEG ratios, based on historical ratios for the specific company, or based on comparable companies current ratios. Who knows how valid that is.

Looking at the SEC forms from the previous year, it doesn't look like they paid off their accounts payable at year end previous year, so I don't know that this year the entire accounts payable is due.

This is a great site and I am learning lots, though clearly have an infinite amount to go.

Thanks again

3:42 am
December 29, 2009


Jae Jun

Admin

posts 1336
3

Adding onto croicodile's great response.

1. If you are serious about wanting to read financial statements, the first step is to not rely on yahoo finance or other portal sites. The only true source should be the SEC.

Make a bookmark for the following link: http://sec.gov/edgar/searchedg…..earch.html

2. Book Value = assets – liabilities

So even if the company has a lot of cash, if liabilities is high, BV will drop.

I've never read Valuengine or visited their site so I can't comment on their service but what I do know is that many of them are equally wrong. The people that write them are human as well, and they do make mistakes. I remember Morningstar pumping up AIG but in the end it went bankrupt and everyone lost money.

Lucky I only added it to my Fool's caps account to see how it would work.

3. Financial stocks are extremely hard to value. The valuation technique and analysis methods are completely different to the standard companies. I still have no idea how to value them and I don't think I ever will.

It is much better to analyse and read financial statements of companies you understand first and then move on from there.

Keep the awesome questions coming.

12:30 am
December 29, 2009


croicodile

Member

posts 6
2

Eric,

Here's a really quick cursory analysis. I go directly to the balance sheet first. 

I'm using google finance quarterly data for this one: http://www.google.com/finance?…..;fstype=ii

Current assets are at 32.92. Their accounts payable, which are due this year (short term debt), is 680.60. So the answer to your question lies in the Long Term Investments area. On their books, they have 977.74 in long term investments. What type of investments are these?  CThey only have 32.92 to use to pay their bills so they will have to sell some of their assets. If their assets have taken a hit, they could be in trouble. Management also seems to be raising money as from 2008-09-30 to 2009-09-30 their outstanding share count has increased from 76.65 to 123.07.

Financial stocks can be tricky. Hope this helps!

11:13 pm
December 28, 2009


eric_2003

Member

posts 19
1

Hi everyone, first time post. I found oldschoolvalue while trying to research how to read cash flow and other financials more critically.

BPSG is a securities and investment bank that has been profitable and continuing their growth in earnings over the last year. Cash per share according to financials on yahoo is 7.95, and it is selling for around 4.8 now. I was in at 5.2 or so in an amount immaterial to net worth.

What I can't understand is why the cash per share could be 7.95, and yet the book value, which should include all tangible assets, is at 2.74.  Further, reading the cash flow quarterly statements I can't figure out how there is an "other" category posting a loss of 289 million. It also appears that the majority of the quarter ending Sep 30 growth in earnings was due to financing of stock that I think was sold at 6.50 to the public.

Yet my Valuengine marks it as one of the top buys, and the average analyst target is around 11.

Any ideas? I've posted the key stats from yahoo below. Thanks… and if any quick pointers to learn how I may have misread the statements would be great

FINANCIAL HIGHLIGHTS  
Fiscal Year
Fiscal Year Ends: 31-Dec
Most Recent Quarter (mrq): 30-Sep-09
Profitability
Profit Margin (ttm): 15.08%
Operating Margin (ttm): 19.95%
Management Effectiveness
Return on Assets (ttm): 5.64%
Return on Equity (ttm): 21.90%
Income Statement
Revenue (ttm): 311.19M
Revenue Per Share (ttm): 3.63
Qtrly Revenue Growth (yoy): 201.10%
Gross Profit (ttm): 143.33M
EBITDA (ttm): N/A
Net Income Avl to Common (ttm): 46.90M
Diluted EPS (ttm): 0.52
Qtrly Earnings Growth (yoy): N/A
Balance Sheet
Total Cash (mrq): 978.08M
Total Cash Per Share (mrq): 7.948
Total Debt (mrq): 25.71M
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): 1.228
Book Value Per Share (mrq): 2.744
Cash Flow Statement
Operating Cash Flow (ttm): -83.39M
Levered Free Cash Flow (ttm): N/A
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