Brinks—The Original Money Launderers (BCO)

We’ve got a highway robbery of a trade for you today featuring the masked bandits from Brink’s (NYSE:BCO), refillers of ATMs across America.

RUN! It’s the Devil Himself!

As we’ve plotted it, today’s bet could bag us a wild west 3233% profit within a very reasonable time frame.

And as usual, the downside risk is known in advance.

So there’s nothing to be scared of.

Except success…

FUNDAMENTALS

• The stock is currently trading with a bloated P/E of 27.72.
• But not for long, says Wall Street—a year out, analysts expect that metric to contract to just 8.27; that’s to say, a loss of two thirds of the current stock price.  Could it be…?
• The other option, of course, is for earnings to triple in that time frame, a far less likely bet, considering that those same analysts foresee growth of just 20.50% in the next twelve months (not 200%).
• Dividend Yield is 1.30%, but…
• Price to Book is an outlandish 6.62.
• Beyond that, Debt to Equity is an uproarious 7.04 (will it ever be paid back?), and…
• Latest Q/Q EPS—announced May 10^th—were DOWN by a giant 79.60%.

In short, the company may be generating returns, but if so, it’s coming on the back of an alarming quantity of debt—IN A RISING RATE ENVIRONMENT.  And that bodes poorly for both the short and long term.

As they roll out those obligations in the coming months and years, it’s going to prove very costly, and poses a major drag on growth, as well.

Now, the chart—

Bring it on, fellas!

May the Creator of the Universe be blessed Through us!

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew