"What we are looking for are value plays. Obscene value plays. In the Graham tradition..."
Well, Stone & Webster (SW) doesn't sell for below net-net. But, it sells for below just about everything else. Like almost 75% below per share revenue, which seems "obscene" enough (see:
stocksheet.com ).
porc scoffs that SW never seems to make money in one year without losing even more in the next. I take porx point to mean that constructing petrochemical plants, nuclear power plants, etc., doesn't have the same kind of fat and predictable margins as, say, selling soda, razor blades or videocassettes of the Lion King.
However, if SW got back to the 5% net margins of yore, the p/e would be just over 5 at its current share price. In this week's Barron's (3/22/99) Rhonda Brammer (as told to Alan Abelson) explains the situation thus: SW had always been engineering driven, until a more shareholder value oriented CEO took over in 1996. Needless to say, a company with this kind of a time lag between book and bill cannot be as nimble as an AOL. Nevertheless, she was left very impressed by the progress to date.
Unfortunately, building petrochemical plants in places like Indonesia, and oil prices uncooperatively plummeting, have not made the new CEO's task easier.
Personally, I don't like any company whose fortunes are so leveraged on a rise in the price of oil (unless, of course, its ticker symbol is XON). But, I thought SW looked like a fit for this thread. |
