Saturday, February 9, 2013

Sprint Nextel (S):Fundamentals not great at all

I wanted to start with large cap tech stocks as I cover the tech stock,. anyway. The Sprint Nextel (S) earnings report was out three days ago and I thought I'd do a bit of equity research on that. I know what your thinking: Where is the Apple equity research post that I promised. Well, I am here to tell you that it will come soon. Now lets look at a stock that is great candidate for shorting.


Price Action:


Sprint Nextel 10-Year Price Action
Source: DailyFinance

Sprint Nextel is up a 140% and why do I say to short the stock. Just take a look above at how the stock has been doing over the last 10 years.

Income Statement:
Here are the last five years income statement stats to note. The stock price going up this year must be due to the revenue rising persistently every quarter. However, the revenues are nowhere near the $40.1B revenue generated in 2007.
The negative net income and EPS numbers must be noted here for Sprint bears. 
Income Statement           
Quarter
Sales
Growth
Net Income
Growth
EPS
Growth
2012 Q4
$9005
2.76%
-$1321
-72.23%
-$0.44
-69.23%
2012 Q3
$8763
-0.90%
-$767
44.18%
-$0.26
43.48%
2012 Q2
$8843
1.25%
-$1374
58.86%
-$0.46
-58.62%
2012 Q1
$8734
0.14%
-$863
33.77%
-$0.29
32.56%

Year
Sales
Growth
Net Income
Growth
EPS
Growth
2012
$35340
4.93%
-$4325
-49.65%
-$1.44
-50.00%
2011
$33680
3.44%
-$2890
16.60%
-$0.96
17.24%
2010
$32560
0.93%
-$3465
-42.24%
-$1.16
38.10%
2009
$32260
-9.48%
-$2436
12.88%
-$0.84
14.29%
2008
$35640
-11.12%
-$2796
90.62%
-$0.98
-51.24%
Note: All values in the tables are in Millions of USD (except for per share items)
Balance Sheet:
Sprint's balance sheet doesn't look to good either in the table below. The cash column is the only encouraging sign with it growing over the period shown as opposed to the others like equity that has declined on average 15.3%.
Relative to industry stalwarts such as AT&T (T) and Verizon Communications Inc. (VZ), Sprint lags behind.  

Balance Sheet
Year
Current Assets
Total Assets
Intangibles
Current Liabilities
Total Liabilities
Cash
Growth
Equity
Growth
Shares
Growth
2012 Q4
$13760
$51570
$22370
$8874
$44480
$8200
29.56%
$7087
-16.61%
3000
-0.10%
2012 Q3
$11610
$48970
$22390
$7947
$40470
$6329
-6.40%
$8499
-7.89%
3003
0.13%
2012 Q2
$11600
$49020
$22420
$7363
$39800
$6762
-10.70%
$9227
-12.87%
2999
0.07%
2012 Q1
$12220
$50620
$22400
$6439
$40030
$7572
35.29%
$10590
-7.35%
2997
0.03%
2011
$10340
$49380
$22430
$6499
$37960
$5597
2.27%
$11430
-21.44%
2996
0.27%
2010
$9880
$51650
$22700
$7891
$37110
$5473
39.48%
$14550
-19.61%
2988
0.50%
2009
$8593
$55420
$23460
$6785
$37330
$3924
5.51%
$18100
-9.14%
2973
4.06%
Note: All values in the table are in Millions

Bottomline:
Value investors are so not going to love this telecommunications stock. 



 

Tuesday, February 5, 2013

XOM NAV

I was busy doing an NAV analysis on Exxon Mobil (XOM) and it turned out that the stock is actually overvalued. The NAV per share is $65 if we take conservative growth rates. 

Download

(XOM-NAV-Conservative Analysis - Google Docs)