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Holly LaFon
Holly LaFon
Articles (10137)  | Author's Website |

Francisco Garcia Parames Comments on Babcock

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February 19, 2019 | About:
Babcock. There were no major developments in the fourth quarter; Babcock (NYSE:BW) continues to generate profits, which are earmarked to reduce debt and pay dividends. In the meantime, its share price is still being affected mainly by Brexit and the market refuses to acknowledge the quality of its various businesses (defence, emergen-cy and nuclear services). As a result, Babcock is trading even further below its intrinsic value. One way of illustra-ting this would be as follows: the annual dividend yield was 6% at year-end. If Babcock were to distribute all the distributable normalised profit among its shareholders, the dividend yield would be double the current figure. These intrinsic yields would normally attract investors, pushing up the share price considerably. The main mem-bers of the management team must think the same, for they purchased shares following the release of earnings in November.

From Francisco Garcia Parames (Trades, Portfolio)' fourth-quarter 2018 shareholder letter.

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Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

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Comments

brinsley
Brinsley premium member - 6 months ago

HOLLY THERE IS CONFUSION IN THE STOCK TICKER. PARAMES IS SPEAKING ABOUT BABCOCK INTERNATIONAL GROUP PLC THE UK COMPANY THAT IS STILL PAYING A DIVIDEND AND GENERATING PROFIT. THE GURUFOCUS STOCK TICKER IN YOUR ARTICLE REFERENCES BABCOCK AND WILCOX WHICH IS A US LISTED COMPANY WHICH IS RUNNING AT A LOSS AND NOT PAYING A DIVIDEND.

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