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TAL International Group, Inc. (TAL - Snapshot Report), a global container leasing company, is still expected to see double digit earnings growth in 2011. This Zacks #2 Rank (buy) is also a strong value with a forward P/E of just 7. But with the global economy apparently slowing, what will happen to earnings in 2012?

TAL International is at the forefront of the global economy because it acquires and leases intermodal freight containers and chassis to customers around the world. If the global economy is slowing, the company will be among the first to see it.

Its fleet consists of approximately 992,000 containers and related equipment. It operates 18 offices in 11 countries and about 216 third party container depot facilities in 39 countries.

Second Quarter Still Saw Strong Demand

TAL reported its second quarter results on July 27. Given what has happened since then on the global stock markets, that seems like an eternity ago.

But back in July, the company beat the Zacks Consensus Estimate for the 6th consecutive quarter. Earnings per share were 99 cents compared to the consensus of just 82 cents, which was a 21% surprise. This was also a 100% increase over the second quarter of 2010.

Utilization rates continued to be high, as the fleet averaged 98.6% for the second quarter. Sale prices for used contained also continued to rise in the quarter.

Leasing revenue jumped 41% to $106.5 million from $75.5 million a year ago.

New Investment

Investment in new containers continued in the first half as the supply/demand imbalance in the container market remained.

As of July 27, TAL invested $700 million in new container purchases or sale-leaseback transactions. About 75% of the new equipment was either on-hire or committed to lease transactions.

The container leasing market fundamentals remained strong overall, but peak-season trade volumes had, so far, been less than many of TAL's customers had anticipated.

However, its customers also continue to rely more heavily on leasing containers than they did before the financial crisis when they would have purchased them instead.

In July There Was Optimism

In July, the company expected the container market to remain "favorable" for the rest of the year.

"The supply / demand balance for containers remains generally tight, new container prices remain historically high, and we expect most of our customers to remain cautious about placing large orders for new containers," said Brian M. Sondey, President and CEO.

"As a result, we expect our key operating metrics to remain strong throughout 2011," he added.

That Juicy Dividend

In July, TAL announced a 52 cents per share quarterly dividend which was payable on Sep 22 to shareholders of record as of Sep 1. It was the 7th consecutive quarter that the dividend had been raised.

It is currently yielding a juicy 7.8%.

The dividend is determined quarter by quarter. In July, the company saw continued growth in its cash flow and income and thought that the market environment would remain favorable for the foreseeable future.

The company is scheduled to report third quarter results on Oct 26, so we'll see how "safe" the dividend is and whether it can be sustained going forward.

Zacks Consensus Estimates Rise for 2011 and 2012

1 estimate has risen in the last 30 days for 2011 which has pushed up the Zacks Consensus Estimate to $3.93 from $3.70 per share.

This is earnings growth of 80.9%.

I don't think anyone doubts that 2011 will be pretty solid.

But what about 2012?

While the 2012 Zacks Consensus has also risen in the last 30 days, the analysts are essentially predicting no growth compared with 2011.

While the 2012 Zacks Consensus Estimate rose to $3.94 from $3.78 per share in the last month, that is just a penny more than 2011 estimate.

Lots of Value

While TAL's shares have pulled back in the summer sell off, it hasn't been as extreme as the sell off in the financial crisis. Check out the 5-year chart.

Still, there is a lot of value in these shares. In addition to a really low forward P/E of just 7, the company also has a price-to-book ratio of 1.7.

A P/B ratio under 3.0 usually means there is value.

Additionally, TAL has a stellar 1-year return on equity (ROE) of 22.4%.

TAL has been cashing in on container demand the last 2 years and it has been rewarding shareholders with a juicy dividend along the way. The biggest question that remains is if it can keep this earnings growth into 2012. Are the good times about to end?

Stay tuned to the third quarter earnings report scheduled for Oct 26 to find out.

This Week's Value Zacks Rank Buy Stocks

It's a challenging market for RV makers as economic uncertainty depresses sales. But Thor Industries, Inc. (THO) still managed to surprise on fiscal fourth quarter Zacks Consensus Estimate by 10%. This Zacks #1 Rank (strong buy) is a value stock with a forward P/E of 11.1. Read the full article.

Looking for an energy play under $5 that also has earnings growth? Parker Drilling Company (PKD) is expected to grow earnings by 477% in 2011. This Zacks #1 Rank (strong buy) is also a value stock with a forward P/E of just 9.6. Read the full article.

Silver crashed from multi-decade highs over the summer which put pressure on silver mining stocks. Hecla Mining Company (HL) is still expected to see double digit earnings growth in 2011 and 2012. Yet this Zacks #1 Rank (strong buy) also has a lot of value with a forward P/E of 10. Read the full article.

Don't count out the gold miners just yet. Gold Fields Limited (GFI) is still expected to grow earnings by 155% in 2011 even as gold prices have pulled back from record highs. This Zacks #1 Rank (strong buy) is also cheap, with a forward P/E of just 11. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.

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