Hello, you two. May I join you?
I found SIGC after running a series of Telescan searches, looking for undervalued stocks with price growth potential. It has been sitting on my watch list since the 4th of July, since which time it has appreciated almost 25%.
But I haven't taken the plunge for a number of reasons, including: 1) I don't know beans about the insurance business --and I'm not sure I even want to; 2) SIGC went public less than a year ago, so there's not much of a track record to go on; 3) the quarter-to-quarter EPS numbers jump up and down (whence the inconsistency?), and 4) when compared to its industry, some of the numbers look, well, "odd."
To be specific on point 4 (my data comes from Market Guide's Ratio Comparisons):
VALUATION RATIOS: whomps industry on p/e, price to sales, price to cashflow, price to free cashflow.
SALES: ditto.
EPS: EPS vs. 1 quarter ago much worse; EPS (TTM) vs. EPS (TTM) one year ago much better; ditto 5-year EPS growth rate.
FINANCIAL STRENGTH RATIOS: Why, oh, why, does anyone hardly ever give figures for insurance companies' quick/current/debt-equity/interest coverage ratios??? Market Guide gives "NM" (not meaningful) across the board for the whole industry, including SIGC. Why "not meaningful"??
PROFITABILITY RATIOS: SIGC comes in with lower operating & net profit margins than the rest of the industry. (Again: when it comes to gross and EBITID margins, Market Guide gives everybody an "NM". ??)
ROA & ROE: SIGC way ahead of industry.
EFFICIENCY (revenue per employee & net income per employee): SIGC way behind industry. (Too many employees?)
TURNOVER RATIOS: None given for industry as a whole (NM again).
No doubt you will tell me -- and you are right -- that I should look at SIGC's annual report to get a handle on the discrepancies that trouble me. But to be frank, I'm not sure I would understand the report, because I don't understand the business SIGC is in.
Any thoughts?
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