RE:Weighted average sharesslimjim11 wrote: Bluecollar, thank you for agreeing that using the shares outstanding at the end of a period in which a significant share issue has been done, is a negatively distorting methodology. The company had no time to earn revenues on the shares issued at the end of fiscal 2015. To be fair, we need to look at revenues achieved through 2015 since the last significant share issue: in 2013, revenues were $423,688 on 81,358 shares or $5.21 per share, and these revenues grew to $554,751 at the end of 2015 or $6.82 per share on these 81,358 shares, a compound growth rate of 14.4%. Proven, reliable growth.
Your method is very simplistic and conveniently ignores the dilutive DRIP shares issued to Subsidize the Cash Dividends. Not to mention the Balance Sheet and Off Balance Sheet Debt used to generate Revenue and more importantly Net Cash From Operations in the period you used.
Using your method, I could legitimately say that in the same period the Share count increased by 18% and ignore everything else.
In 2015 the “Weighted-average” was 8.77m or abt. 9.1% less that the YE Share count.
In my “opinion” using the “Weighted-average” method provides the best representation of “Reality”. Also in my “opinion” Net Cash Flow From Operations is more important than Top Line Revenue.
That is why I used “Weighted-average shares outstanding-basic”; the same method STB (and all other companies) use to calculate EPS when I did my 2009 – 2015 analysis.
What you are missing is that the $69.1m USD raised on March 06 2015 was NOT for Future Revenue / Cash Flow Growth. It was to pay down the Debt accumulated for Past and Current Revenue / Cash Flow. That gives them the ability to use New Balance Sheet Debt for Future Growth and possibly Dividend Subsidy.
From the very beginning to date Student Transportation Has Grown the Company and Subsidized the Distribution/Dividend with Dilutive Equity.
Student Transportations SOP has been to Run Up The Balance Sheet Debt and regularly replace it with Equity.
You don’t have to take my word for it. Denis Gallagher has consistently told us that they Grow the Company with Debt and replace it with Equity.
I like Denis but it is clear the when he is being interviewed on BNN or wherever he “Blows A Lot Of Smoke”. To be fair they all do to some extent.
In a Wall Street Journal Interview on Aug 17 2015 that can be found here;
https://www.ridesta.com/common/download/download.cfm?companyid=STBUN&fileid=847988&filekey=E0A514FB-35E1-452C-B6F2-0EB390AA4F66&filename=Student_Transportation.pdf Denis actually said this;
TWST: How do you finance the company’s growth? Mr. Gallagher: We are a dividend-driven company. We came out of that income trust where we agreed to pay a certain percentage of our free cash flow back to shareholders, and then we go back to the market for growth. In our particular case, we use our credit facility to grow, and then every so many years, we’ll go back to the market, and we say to shareholders, “You get to vote.” But in the meantime, we are giving back literally 7%, 8% — probably today, with our share price down over the last few days, it’s close to a 9% yield, so very attractive for retail folks who like dividends and like steady businesses. As I previously pointed out with only one (1) exception (2009) all the Equity Issues since Student Transportation went public have been at substantially higher prices than the recent Share price. The “Voters” haven’t done well.
For example, SNCF paid $6.10 CAD for their shares in 2008 and recently sold 4m shares for $5.40 CAD. Obviously timing is important when buying or selling and their sale timing wasn’t good but could have been worse.
Student Transportation has a very long history of Subsidizing the Distribution/Dividend and Growing the Company with Dilutive Equity as well as Off Balance Sheet Debt. The historical numbers prove that.
To be fair regardless of the method used the 2015 Payout Ratio was an improvement over 2014 and previous years.
What isn’t known at this time is the effect that the “Revised” Dividend c/w what appears to be a substantial reduction in the DRIP subsidy will have on the Payout ratio going forward.
The current share price is certainly a better entry point than in the past. Anybody that participated in the most recent $7.20 CAD bought deal has had (as usual) their “butts” handed to them. That said it looks like the entire TSX is currently on sale.
As Always; Do Your Own Due Diligence; It’s Your Money !!