April 7, 2024
Looks cheap on a P/E, P/Book Value and on a EV/FWD EBITDA basis
Stock may have a high dividend yield
Company comes up as an attractive purchase on a stock screen due to cheap valuation
Reality:
Free Cash Flow does not cover the dividend
Highly levered balance sheet
Highly competitive industry
Low valuation persists for a long period of time
Poor historical and projected growth in Revenues, Net Income, EPS, Operating Cash Flow and EBITDA
Recommendation
Do not invest in these type of companies.
Example – BCE