The fundi's on the boats stink, IMHO. What? Come again?
I bought TDW (and have held on to it despite a strong urge to sell) precisely because its fundamentals looked (and continue to look) so good to me.
Of course, you know much more about this business than I can ever hope to. I have had to rely on number-crunching. And since I am no financial analyst either, I have had to rely on other people's numbers.
Let me run some numbers by you, for your review and comment. For comparison's sake, I will match TDW up with NE, a favorite on this thread. Both companies turned up on a "fundamentals" search I did recently (see -- if you want -- post #16868).
But there are many different definitions of "fundamentals."
1) Telescan ranks companies according to various categories, including fundamentals. The criteria Telescan uses for fundamentals strike me as a little odd (i.e., limited): current ratio, debt/equity ratio, cash/price ratio, interest coverage. Here, NE (95th percentile )ranks a little ahead of TDW (93rd percentile), but the 93rd percentile is still pretty doggone good!
2)If by "fundamentals" you mean EPS/sales/cashflow growth and projected earnings, the two companies are virtually neck & neck, according to Telescan's categories for short-term growth rank and long-term growth rank. The respective numbers are NE: 91st & 92nd percentiles, respectively; TDW: 95th & 91st. (In the value categories, TDW outdistances NE by a wide margin.)
3) If by "fundamentals" you mean net profit margin,NE is indeed way ahead of TDW. MarketGuide's Ratio Comparisons give NE a margin of 37%, as against TDW's margin of 22.5%. But TDW's numbers are still good compared to the industry average of 14.5%. And its ROE is 26.8%, compared to NE's 25.2%, and the industry average of 19.9%.
4) I am conservative enough to put (perhaps undue) emphasis on EPS consistency, and free cashflow. They are part of the "fundamentals"
picture, in my view. Companies that are strong in this respect are less likely to disappoint investors, and hence -- in theory! -- less likely to take a sickening nosedive.
a) EPS consistency. Both companies very good in this respect, especially considering the cyclical nature of the industry. NE scores in the 88th percentile for 5-year EPS consistency. But TDW scores in the 95th percentile. And for 10-year EPS consistency, it scores in the 99th. It has not had a loss in a single quarter for the last 10 years! This consistency continues into the present, with positive surprises in all 4 preceding quarters (cf. NE, with 1 positive surprise & 2 negative).
f) Free cashflow. TDW the winner hands down, with a 13.73 price/free cashflow ratio, vs. NE's -23.23. Another way of looking at it: free cashflow per share. TDW, 93rd percentile; NE, 17th (with negative free cashflow).
There ARE areas in which TDW truly stinks: Momentum (4th percentile); long-term technical rank (23rd); short-term (7th). Ugh!! But this is not what you meant, is it?
What DID you mean? Eagerly await a reply!
jbe
|
