CKH: Seacor Holdings Looks Like an Enticing Wallflower
Posted on Thursday, May 15th, 2008 | In Current Market News, Stocks to WatchMy latest column is up at RealMoney. It is part of an ongoing series on “wallflowers” – stocks that have little or no analyst coverage from Wall Street. In this case, it is Seacor Holdings (CKH).
Over the last 12 months, Seacor has generated about $325 million in free cash flow, which equates to a very juicy free cash flow yield of nearly 17%. This wasn’t just a fluke number, either. Over the last three years, free cash flow has averaged $295 million per year.
At 1.2 times book value, Seacor is trading well below the industry average (according to Zacks Research Wizard) of 2.7 times. On the basis of its return on equity, I estimate a sustainable growth rate in the high single digits. Adding in a potential valuation expansion to the industry average, total return could range from 20% to 30% per year, with the main variable being the estimated time for Seacor’s price/book to converge to the industry average.
Disclosure: At time of publication, William Trent has no financial position in the companies mentioned in this article.
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 About William A. Trent (http://stockmarketbeat.com)
Stock Market Beat editor William A. Trent, CFA, has been an equity analyst since 1996 and is co-author of Understanding and Evaluating Prospectuses, Offering Documents, and Proxy Statements. His experience includes stints with institutional investors responsible for more than $70 billion in assets and covers all market-cap sizes. Sector concentrations have been within the TMT (Telecom, Media and Technology) and Transportation sectors. He is also the senior editor of Financial Education. He is available for freelance writing and consulting projects and can be contacted here. |
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