Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, private equity and venture capital firm American Capital
With that in mind, let's take a closer look at American Capital's business and see what CAPS investors are saying about the stock right now.
American Capital facts
| Headquarters (founded) | Bethesda, Md. (1986) |
| Market Cap | $2.44 billion |
| Industry | Asset management |
| Trailing-12-Month Revenue | $574 million |
| Management | Founder/Chairman/CEO Malon Wilkus CFO John Erickson |
| Return on Capital (average, past 3 years) | 4% |
| Cash/Debt | $200 million / $1.63 billion |
Source: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 95% of the 2,055 members who have rated American Capital believe the stock will outperform the S&P 500 going forward. These bulls include gameguru and njmiles03.
Earlier this fall, gameguru tapped American Capital as a tempting turnaround opportunity:
Call me a sunny-eyed optimist, but this stock looks too good to pass up. Its renegotiated its debt covenants and been moved off the "going concern" deathwatch. ... When they finally reinstate a dividend (likely sometime in 2012), the yield should be substantial, and I expect the stock to follow. A possible multi-bagger in the making.
American Capital even trades at a paltry price-to-book of 0.6. That represents a discount to large banks such as BB&T
CAPS member njmiles03 elaborates on the bull case:
ACAS had a rough go of it through the recession, having to deal with hostile creditors who threatened to force ACAS into bankruptcy & creating negative press. With those creditors no longer in the picture, and ACAS's portfolio on the upswing, NAV should continue to improve over the next few years to pre-recession levels. Further, ACAS has been buying back shares ... and plans to continue as long as the stock price is below NAV. While not currently paying out distributions (in order to maximize the use of prior year losses for tax writedowns), the buyback program contributes significantly to shareholder value. This company is returning to greatness; jump on board when share price is severely discounted to NAV.
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