FWIW, I bought Cendant (CD) yesterday based on the following:
Positive SSG, giving a buy using 13% EPS growth, a 25-50-25 zone, low price of $8, ave high PE of 33, giving an up/dwn of 8.5 to 1.
Other notes:
"One of the foremost providers of travel related, real estate related and direct marketing consumer and business services in the world."
ValueLine rating of "1" Aug. 31
CEO exercised 3.5 mil options Oct. 29 announcement
TPE: 12.4
FPE: 11.8
PEG: .84 or .81
NPM: 15.4%
ROE: 15%
Consensus: "Strong Buy"
Only 7 analysts cover it
Graham Value Calculation:
Company: CD
Date: 11/13/01
Current Price: $14.03
Enter next year's expected earnings (ProjEPS): $1.18
Enter "G" Estimated 7-10 EPS growth rate: 10
P/E maximum if not 8.5: 8.5
Graham Fair Value: $25.17
Percent Growth to Fair Value: 79.37%
VectorVest: CD has a Value of $20.51 per share.
S&P Fair Value: $18.70
Snippets from Valueinvestorsclub.com:
10/1/2001 9:26:00 PM CD ($12.67) <Cendant Corp > by met99
Cendant operates in 4 segments: Hospitality: hotels and time shares; Real Estate Services: brokerage, mortgages and employee relocation services; Vehicle Services: car rentals, fleet management and parking facilities; and Financial Services, involved in insurance and financial products to consumers and has the number two tax prep service.
It is a balanced operation in that some of these businesses do well in good economic times,
while others thrive in the low interest environment of poorer economies. It is also important
to understand that many of these are franchise, as opposed to company owned operations. Thus, fixed costs for Cendant are far less a problem than a pure operating company. Well-known brands include Days Inn, Ramada, Super 8, Howard Johnson, Travelodge, Century 21, Coldwell Banker, ERA, Avis, and Jackson-Hewitt.
Cross marketing between the various segments is utilized to a high degree. Someone booking a
hotel can be transferred to Avis to arrange a car for example. Cendant has been acquiring
additional complementary businesses. Buyouts of Fairfield Resorts and Avis were closed in the
first half. The acquisition of Galileo International, a global travel services distributor like
Sabre, closed 10/1 at a sharply reduced cost, and Cheap Tickets, a distributor of discounted
travel products, will be added to the fold later in October. Both are expected to be accretive to
earnings, although at lower levels.
This cash generating capacity accompanies a strong earnings growth vehicle. Even in the face
of a weakening economy, CD revised earnings upward in August. Since 9/11, those estimates
have become obsolete, but in a conference call 9/28, management reduced 3rd quarter adjusted
earnings expectations down a penny to 32 cents/share. |
