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

To: bruwin who wrote (21497)	6/19/2005 1:47:13 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78670

My conclusions different. "So GCI is in favour?" Only as a buy for me. Not in favor in in the market of course as seen by its declining share price. "A BIG negative, in my opinion, is the massive amount of INTANGIBLE ASSET" The valuation numbers the company or anybody else has put on the the intangibles are irrelevant to me. I only care about the results those intangibles can produce. Even if I assume the intangibles are worth zero and produce zero, the remaining assets produce the net profit margins that are very good - imo. "...excessive long term debt...". I don't see where the debt/equity ratio is outlandish compared to past years. And debt, at $4.7 Billion, seems to me adequately serviceable by free cash flow of $2.2B dollars (numbers per Yahoo). "Therefore, if GCI was exhibiting QUALITY fundamentals, it would be a "bargain" buy at P/E <= 10." Looking at high-low p/e's, I don't see from S&P report where GCI's ever traded below p/e 13 in the past ten years. The business model for newspapers certainly is under attack, maybe in jeopardy, so the p/e could drop to maybe 10, giving a price of $50 (based on about $5/sh eps est.). That'd be a bargain all right, imo. Stock hasn't touched $50 in five years. It could again, but my bet is such a bargain as that is not foreseeable any time soon - partly because the company continues to increase stated book value, revenues, and dividends year after year (so far). "poor showing in what GCI is earning from its Employment of Capital" It looks to me like GCI is getting about 9% roa - up a bit from past years. For you that may be a poor showing, but for me that's a pretty decent number, and a good number when I consider what I have to pay for it (stock price). I particularly like the net profit margins that this company can produce. Consistently very high and averaging maybe 16.7% over the past six years. This metric has to be put into context though - what price am I willing to pay for each percentage point of margin? For me, based on a calculation I do, the stock is inexpensive - a buy - based on past profit margins (16.7%). All jmo. I could be wrong. To reduce risk, a small position within a diversified portfolio.