Globe's McGugan considers Coeur D'Alene a cash cow
2012-04-25 07:02 ET - In the News
The Globe and Mail reports in its Wednesday edition that Coeur D'Alene Mines is a greenback-spewing cash machine. The Globe's Ian McGugan writes in the Number Cruncher column that Coeur D'Alene is a United States firm that can generate a lot of cash even after covering all of its expenses. By virtue of its ability to generate cash, Coeur D'Alene is in a great position to take advantage of investment opportunities. Mr. McGugan says that should, at least in theory, bode well for shareholders. Mr. McGugan used the services of CPMS consultant Craig McGee to help spot potential U.S. cash cows. The company had to have a market cap in excess of $1-billion (U.S.). Coeur D'Alene's market cap is about $1.9-billion (U.S.). It had to have a free-cash-flow yield greater than 10 per cent. Coeur D'Alene's is 17.7 per cent. It also needed a free-cash-flow margin greater than 10 per cent, of which Coeur D'Alene's is 32.7 per cent. Also, for Mr. McGugan to recommend a stock it had to have an interest coverage ratio in excess of 5 and Coeur D'Alene's stands at 8.1. Coeur D'Alene has a year-to-date return of negative 13 per cent. As a rule, companies with lots of free cash flow do pay off for shareholders, says Mr. McGugan.