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Looking ForwardPNNT will report earnings on May 8th, after the market closes. May 8th is just 2 trading days away. No doubt we will see a reduction in the NAV because the nation’s credit metrics were not good through March 31st. But the market may have already discounted that decrease because it knows those types of mark to market markdowns can be quickly reversed thus revitalizing the NAV. In one recent report dated 4/29/08, the analyst said that loan portfolios were still under price pressure thru March 31st, (as measured by the LCDX index), but those prices have been recovering since the end of the quarter. In a separate report, an analyst said that (based on a similar index) the NAV decline associated with quotable securities this quarter should largely be recovered in the second quarter. So we can at least hope that the March quarter (about to be reported) will be the last troublesome quarter relative to mark to market changes. The NII estimates for the next 4 quarters are $.21, $.22, $.24 and $.28. Note that the $.24 of Q4 (ending September) exceeds the current $.22 dividend which means that if PNNT delivers these earnings we could see dividends begin to increase again in two or three quarters just from NII earnings. The FY 2008 (ending September) EPS estimate is $.91, 2009 is $1.17, and 2010 is $1.53. Those are nice increases. If one calculates the PEG using the 2008 to 2009 projected EPS growth rate, the PEG comes out to a cool .31. And using 2009 to 2010 calculates to an even lower PEG. The FC five year PEG for PNNT is 0.71 while the average PEG for all stocks is 1.39. Of the 7 analysts, 5 have a “buy” rating and 2 have a “hold”. The average target price is $12.79 or 53% above the current price of $8.36. At $8.36, the current dividend yield is 10.5%. There are never any guarantees in this investing business and, as always, all of this is just one opinion. But things are looking good. Jan |
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