GEO is guiding negative FCF after paying dividend in FY2020.
GEO's leverage ratio is running against its covenant at FY2020 guidance.
The cost of debt is higher in the ESG-focused world.
Redirecting capital to deleveraging and stock buyback is a better use of capital.
Free Cash Flow & Debt Covenants
GEO's dividend is not as defensible as other SA authors have indicated. A simple calculation based on the management guidance shows that the company will generate negative FCF after paying dividends in FY2020. Even at the high-end of the guidance, GEO is still drawing ~$10 million on its credit facility to pay the dividend. Also at the high-end of the guidance, the senior secured leverage and total leverage is about ~0.5x away from tripping over the... more
SpartanNash Company (Nasdaq: SPTN) (“SpartanNash” or the “Company”) today announced that its Board of Directors has approved a quarterly cash dividend of $0.1925 per common share. The dividend will be paid on June 30, 2020 to shareholders of record as of the close of business on June 12, 2020. As of May 26, 2020, there were 35,682,308 common shares outstanding.... more
Americold Realty Trust (NYSE: COLD) (the “Company” or “Americold”), the world’s largest publicly traded REIT focused on the ownership, operation, acquisition, and development of temperature-controlled warehouses, today announced that its Board of Trustees has declared a dividend of $0.21 per share for the second quarter of 2020, payable to holders of the Company’s common shares. The dividend will be payable in cash on July 15, 2020 to shareholders of record at the close of business on June 30, 2020.... more
Pinnacle Bancshares, Inc. (OTC PINK: PCLB) today announced that its Board of Directors has approved a quarterly cash dividend of $0.19 per share. The dividend is payable June 19, 2020 to stockholders of record on June 8, 2020. The quarterly amount is equivalent to an annualized rate of $0.76 per share.... more
The U.S. stock market has continued its decade-plus of dominance versus global peers during the 2020 sell-off despite a less-than-stellar domestic response to the global health crisis.
Differences in growth rates, real interest rates, and index and economic composition will necessarily lead to some performance dispersion, but placing domestic markets in a global context helps frame valuations.
U.S. stocks, particularly the tech-focused Nasdaq, are trading at above average valuations, especially when adjusted for (relatively) higher interest rates in the U.S.
Like many U.S. investors, I have a U.S.-centric investment portfolio. Since the beginning of the last financial crisis, having a U.S.-focused portfolios has been a good trade. Since the end of 2007, the S&P 500... more
Recently, Methanex broke their dividend streak after reducing them by a massive 90%, however, there are reasons to believe that they can be reinstated once operating conditions recover.
Historically, they have been capable of easily covering their dividend payments on average since their free cash flow has been ample.
Although their leverage is moderately high, their ample free cash flow means that they should be able to deleverage quickly once operating conditions recover.
Whilst there have been recent concerns regarding their liquidity, this appears overblown and thus they are not likely to see a liquidity crisis in the foreseeable future.
Since their old dividend would only provide a yield on cost of around 6% and there are still significant uncertainties surrounding the... more
Provision expense will likely be higher than normal in the second quarter due to the deterioration in the economic outlook.
The maturity of expensive deposits and FHLB advances will ease the pressure on the net interest margin.
Paycheck Protection Program and the Main Street Lending Program will likely support earnings.
The riskiness of the stock diminishes the attractive valuation.
Earnings of Sterling Bancorp (STL) plunged by 88% sequentially in the first quarter to $0.06 per share due to a surge in provision expense and net interest margin compression. On an adjusted basis, the company reported a loss of $0.02 per share. After the decline in the first quarter, earnings will likely improve in the remainder of the year but remain below last year’s earnings. Provision... more
Chicken Soup for the Soul Entertainment is an emerging streaming company.
In Q1 2020, the company made a cash flow milestone, which should give preferred shareholders confidence in their dividend sustainability.
The company's strategic plan for growth makes sense.
On the surface, investors may look at Chicken Soup for the Soul Entertainment (CSSE) and think they are dealing with a publishing company. In fact, CSSE is far more modern. The company specializes in streaming content and, after a 2019 joint venture, it is the primary investor in freemium streaming service Crackle. While the company is considered a high-risk growth play, it has a preferred share issuance (CSSEP) that is currently priced below par with a coupon yield of 10.4%
Source: Seeking Alpha
Recently, Covanta disappointed their shareholders by reducing their dividend by slightly over two-thirds.
Whilst this was largely framed as a result of the coronavirus-related economic crisis, realistically, their ability to sustain their dividend was already highly questionable.
During 2017-2019, their dividend coverage was virtually non-existent, whilst their leverage was very high, and thus, they will need to deleverage.
Based upon my analysis, it seems likely that deleveraging could easily take over a decade, which is not attractive for dividend investors wanting their previous dividend reinstated.
Given this, I believe that a neutral rating is appropriate; however, this was only due to their adequate liquidity and without it my rating would have been... more