Hi, Pat. I am wondering about your opinion on Student Transportation Inc. The stock has dropped in price in recent months, to the point where it has a high yield. Is it a buy, and is there a risk the dividend will be cut soon? Thanks.
Student Transportation Inc., $4.88, symbol STB on Toronto (Shares outstanding: 96.5 million; Market cap: $479.4 million; www.ridesta.com), is North America’s third-largest school bus operator, with almost 13,000 vehicles in Canada and the U.S.
In its fiscal 2016 first quarter, which ended September 30, 2015, Student Transportation’s revenue rose 5.5%, to $93.4 million from $88.5 million a year earlier (all figures except share price and market cap in U.S. dollars). The company lost $9.5 million, or $0.10 a share, compared to a year-earlier loss of $8.8 million, or $0.11 a share. Student Transportation typically loses money in its fiscal first quarter because it includes the summer break.
The stock yields a high 11.9%. Student Transportation has paid dividends for 135 consecutive months, and while there are no guarantees, its payout appears safe for now.
Still, the company’s rapid growth through acquisition adds risk; its debt of $278.4 million represents a high 82% of its market cap. The company also operates in a competitive business.
We…
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