Price actionBack in spring of 2017 there were nothing but blue skies ahead for Peller with years of dividend increases, a low payout ratio and optimistics investors. By the time 2018 came around ADW.A went over $18. Interest rates and inflation were low. Unfortunately Covid changed that. Investors became less optimistic and less optimistic. The stock price chopped its way down to $4.
Peller has limited liquidity, has cut back on CapEx and increased borrowing. A DCF generated by any number of online sites show a negative value. The Stock Price is better than the business likely because of the dividend and that worries me.
The stock price will continue to chop lower as investors are willing to sell at lower prices. With short duration US Tbills above 5% its hard to fault investors willing to sit on the sidelines and buy the breakout which may only be in a few years. This usually results in a better risk adjusted return. An investor that sold some of their position last spring at $7 and parked their money in T-Bills is doing significantly better. Peller is in a negative feedback loop. A decade ago when rates were low investors would step in, buy the dip and get paid for it when the stock price went up. Generally companies now getting bid up have Scale with low CapEx.
As the stock price continues to decrease management should focus on buybacks if company returns to profitability. The dividend should have been cut last year as the stock is not going to find a floor until its cut and profits are directed towards buybacks. No one wants to catch a falling knife. Hate to be so gloomy but I own stock and can't fight a falling stock price with no end in sight.