1-Star Stocks Poised to Plunge: AutoChina International?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, commercial vehicle leasing company AutoChina International (NAS: AUTC) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at AutoChina's business and see what CAPS investors are saying about the stock right now.
|Market Cap||$470.5 million|
|Trailing-12-Month Revenue||$637.6 million|
Founder/Chairman/CEO Hui Li Yong
CFO Jason Wang
|Return on Equity (Average, Past 2 Years)||18.2%|
|Cash/Debt||$86.1 million / $324.1 million|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 64.5% of the 76 members who have rated AutoChina believe the stock will underperform the S&P 500 going forward. These bears include All-Stars GundersonGroup and TSIF, both of whom are ranked in the top 10% of our community.
Just last month, GundersonGroup raised a red flag on AutoChina's profit growth: "More negative operating cash flow in spite of record 'earnings', perhaps this is due to the bloated customer list of related and affiliated parties."
In fact, AutoChina sports a trailing-12-month free cash flow margin of -18%. Meanwhile, U.S. vehicle rental counterparts like Dollar Thrifty Automotive (NYS: DTG) and Hertz (NYS: HTZ) boast positive free cash flow margins of 9% and 19%, respectively.
CAPS All-Star TSIF also expressed skepticism over the shares:
AutoChina stock remains shaky. The low volume is protecting it and may continue to do so. The company has been questioned since it's inception on how it calculates it's lease profits on it's growing truck leasing business. It has deflected most of the criticism, but some is starting to stick. They have until August 15th to reply to the Nasdaq inquiry. ... As the second largest commercial leasing company in China one would think they could present their books in a clear, concise manner.
What do you think about AutoChina, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Hertz.Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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