After five consecutive quarters of losses it was reported today after the markets closed that MBIA (NYSE: MBI) earned $3.34 per share in the first quarter through March 31, 2009. This flies in the face of analysts expectations of a 33 cent loss.The stock closed today at $6.96 but in after hours trading has been up over $8.00 as I type at 5:00 EST.
For those that have an interest the P/S and P/B are both under 1.0 which is great. On the negative side the company is leveraged almost to oblivion, that is until today.
For some perspective on how cheap this stock might be. If it breaks even for the next three quarters, today's report would give it a P/E of 2.39.
A cash-flowing MBI would cover the debt and might start paying a dividend again. A stabilized MBI with a P/E of just 8.0 would give this stock a price of $26.80, and that's if it breaks even the rest of the year. If it earns as little as $5.00 over the course of the year it could return to $40.00 -- "the stuff dreams are made of".
This one will take further studying because that is too good to be true and the stock is not flying that high -- yet.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI and have open options as well.
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Reader Comments (Page 1 of 1)
5-11-2009 @ 8:11PM
william lindblad said...
If it happens, you can crow as you were calling it months ago. There is a good chance that this information is correct as, if they were holding many bad cards ,positive outlook should really be a cautious outlook.