12-08-2015, 05:16 PM
Dividend cut sucks, but in the long run is the best choice of action for the company and for shareholders.
Frees up $3.37B ($1.51x2.23B shares) in annual cash flows which it can use to fund growth projects and pay down debt. This allows the company to maintain its investment grade credit rating while also avoiding selling off assets at distressed prices to meet cash flow needs.
Could be a tremendous buy if it drops much further. At a $15 share price it would trade at just 6.7 times the forecast DCF of $5B and would also yield 3.3%, which I would expect to see a return to growth in the future once the balance sheet is cleaned up.
The business remains the same as it was at $40 earlier this year and is producing plenty of cash flow. The company simply got ahead of itself with dividend payments and their high leverage caught up to them.
Frees up $3.37B ($1.51x2.23B shares) in annual cash flows which it can use to fund growth projects and pay down debt. This allows the company to maintain its investment grade credit rating while also avoiding selling off assets at distressed prices to meet cash flow needs.
Could be a tremendous buy if it drops much further. At a $15 share price it would trade at just 6.7 times the forecast DCF of $5B and would also yield 3.3%, which I would expect to see a return to growth in the future once the balance sheet is cleaned up.
The business remains the same as it was at $40 earlier this year and is producing plenty of cash flow. The company simply got ahead of itself with dividend payments and their high leverage caught up to them.