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| SemirB |
 Posted: Sat Mar 29, 2008 5:11 pm Post subject: VMC (recommendation) |
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Investing Sr. Associate
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Vulcan Materials (VMC) is the largest producer of aggregates and it sells these agregates to end markets such public inferstructure projects, private nonresidential and private residential. About 44% comes from Fed and State for public inferstructure. The catalyst in this stock is the government dollars that will be spend to rebuild the inferstructure in US. The economic moat that vulcan has built is its size because the only way to grow in its business is through aqusitions. The nature of the business is local and fragmented; therfore, competition is limited to the local producers. In addition, the company is located in the 9 of 10 expected fastest growing states. The business risk that Vulcan carries is the large debt that came with the aquisition of Florida Rock. However, the company earns enough EBITDA to repay it. In addition the current state of the homebuilders will not help the company on Private Residential Revenues. However, the company has been profitable for the last 15 years and still contunues to be.
Valuation:
On 10 year historical valuation the company dividend yields 2% and trades at P/E of 18. That should place the company at 96 according to current years Div and 86 according to 08 EPS of 4.75. A DDM model with discount of 11% and constant growth of 9.5% will yield an intrinsic value of 118. A DCF model will yield an intrinsic value of 81 with WACC of 11%. The current price offers a Margin of safty of about 40% based on DDM. |
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| Im Not Warren Buffett |
| Posted: Mon Apr 07, 2008 8:28 am Post subject: |
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CFO
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| Your constant growth of 9.5% is insanely high. Pretty much any time you narrow the K/G spread to that degree, you'll find the stock is undervalued. |
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| SemirB |
| Posted: Mon Apr 07, 2008 9:00 am Post subject: |
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Investing Sr. Associate
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| I thought I was being conservative because the 10 year average Div growth is 11.1%; 10 year avg EPS growth is 10.7%; and 10 year avr operating income growth is 9.6%. Lowering the growth to 7.9% which is the 10 year avg for Sales, will give me an intrinsic value of 62. The average 10 year div payout is about 37% with 10 year ROE of 17.1%. That gives you an expected growth of 11%. Morningstars Fair value is 140, but it is propable based on a dcf model. My DCF model gives me an intrinsic value of 82. |
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| Im Not Warren Buffett |
| Posted: Mon Apr 07, 2008 9:46 am Post subject: |
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CFO
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| You need to do a multistage model to take into account the fact that earnings won't (can't) grow 10% forever. |
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| frusnak |
| Posted: Mon Apr 07, 2008 2:39 pm Post subject: Re: VMC (recommendation) |
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CFO
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| SemirB wrote: | Vulcan Materials (VMC) is the largest producer of aggregates and it sells these agregates to end markets such public inferstructure projects, private nonresidential and private residential. About 44% comes from Fed and State for public inferstructure. The catalyst in this stock is the government dollars that will be spend to rebuild the inferstructure in US. The economic moat that vulcan has built is its size because the only way to grow in its business is through aqusitions. The nature of the business is local and fragmented; therfore, competition is limited to the local producers. In addition, the company is located in the 9 of 10 expected fastest growing states. The business risk that Vulcan carries is the large debt that came with the aquisition of Florida Rock. However, the company earns enough EBITDA to repay it. In addition the current state of the homebuilders will not help the company on Private Residential Revenues. However, the company has been profitable for the last 15 years and still contunues to be.
Valuation:
On 10 year historical valuation the company dividend yields 2% and trades at P/E of 18. That should place the company at 96 according to current years Div and 86 according to 08 EPS of 4.75. A DDM model with discount of 11% and constant growth of 9.5% will yield an intrinsic value of 118. A DCF model will yield an intrinsic value of 81 with WACC of 11%. The current price offers a Margin of safty of about 40% based on DDM. |
The good news for this stock is institutions are accumulating it's shares. |
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| Grimreaper |
| Posted: Tue Apr 08, 2008 1:07 am Post subject: |
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CFO
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| Im Not Warren Buffett wrote: | | You need to do a multistage model to take into account the fact that earnings won't (can't) grow 10% forever. |
Sheeeeyot...ifn you cumbined SIRI mit XMSR you wud have 1 company that would STILL be too crappy ta EVER generate ANY errrrrnuns....Howerd Sternum stold alla SIRI's errrrnuns fer da next 3 years, and XMSR..well....XMSR is XMSR  Da last time SIRI n XMSR wassa down heeeya at deez heeeya levels, SIRI ran ta $9+.....XMSR ran ta $40+!!!  You tell me what dat had ta do wit errrrnuns and gimme a "convincing" argyoo-munt and I will NEVER post atcha agin!  BTW, did you realize dat AAPL cud sell a POS I-phone ta every single persun on da planut and it wudn even mattah to da stock price?  Here bees what errrrnuns mean  SSSSSSHIT!!!! |
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