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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (3273)	3/15/2003 4:22:35 PM
From: Paul Senior	Respond to of 4690

Jurgis Bekepuris: re: CPC. I haven't looked at how Tilson calculated IPK's ROE. I don't know how Quicken calculated such a low ROE for CPC for year 1998. Value line does show a drop from '97 (19.2%) to '98 (10.4%), followed by 10.5% in '99. That's different from Quicken. Perhaps it has something to do with acquistions and the accounting for them. For example the '98 Kinney Systems Holding of NYC or maybe the later purchase of AllRight Holdings. IF CPC can again earn 10.5% on stated book value (Yahoo, $11.75/sh), that'd bring earnings to $1.23 sh. And show a p/e of $9.44/$1.23 = 7.7 on current price. Given that I see p/e's coming down everywhere - growth or value - (with no end in sight), I call that 7.7, reasonable. CPC stock holders likely will not see the high ROE's of the past. That is because leased and owned facilities now make up so much of current revenues (85% or more, I believe). Management contracts, the other source of revenue, is so much less of the business makeup. It's been those management contracts which have been a source of high ROE returns (because they required just minimal capital investment). I'll start a CPC thread, so if anyone has further interest we can discuss there. Paul Senior