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Strategies & Market Trends : Value Investing
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To: TimbaBear who wrote (15949)12/26/2002 9:30:22 AM
From: Bob Rudd  Read Replies (1) of 78625
 
Timba: I haven't looked at Armstrong recently but would suggest looking at it's extended enterprise multiple with market cap and ALL debt like obligations [Including converts and preferred] less cash in the numerator and all cash flows to those obligations in the denominator before deciding this is cheap. The low share price can be viewed as a 'call' on the residual, but without knowing how far out of the money that 'call' is, it's hard to say it's cheap...I would expect that when all obligations are considered, the price reflects a way out of the money call. An online bond quoter showed Armstrong bonds being offered @ <50% which doesn't reflect much hope for the lower priority equity. OTOH, if there were ever a time for animal spirits to put wind in the sales of beaten down speculative issues, it's now, so you may catch a really nice bounce in Jan irrespective of the true value of equity's residual claims.
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