Macy's, Hertz destined for bankruptcy?

[marmar]

via Yahoo!:



Ten Big Companies That Are Veering Toward Bankruptcy
Posted Sep 18, 2009 12:21pm EDT by Vincent Fernando and Joe Weisenthal in Investing, Media, Products and Trends, Recession

From The Business Insider, Sept. 18, 2009:


Despite a few green shoots in the economy and a rocketing stock market, many large companies are still struggling to avoid bankruptcy.

A new report by Audit Integrity identifies some high-profile names "that have the highest probability of declaring bankruptcy among publicly traded firms."

Which companies appear the worst off? We took the list and removed any company with a market cap under $3 billion. We then ranked the remaining names by a simple measure of the market's perceived bankruptcy risk - Market Cap (MC) divided by Enterprise Value (EV). The less MC vs. EV, the less residual shareholders' value (above what debt holders can claim) the market is pricing-in for the company. Thus a lower MC/EV means the market thinks the company is more likely to go bankrupt.

1. Hertz
When you have tons of debt financing your fleet of cars, falling rental demand really hurts.

While the company raised new capital in May for some breathing room, Fitch and Moody’s actually cut their ratings for the company in July.

Ignoring the downgrade, shares kept rallying and are now at over five times the March $2 low. Best of luck.

Market Cap (MC)/Enterprise Value (EV) = 32%

2. Textron
What a tough time to be selling business jets.

Textron wrote down $2.3 in its backlog this year after it cancelled a new jet design, and demand for its other aircraft-related offerings has plummeted.

Shareholders may be heartened by the company’s ability to push back some debt maturities lately, but deteriorating credit quality at the company’s leasing arm makes the outlook uncertain at best.

MC/EV=39%

3. Sprint Nextel
Sprint Nextel is bleeding customers, and could lose as many as 4.4 million net post-paid subscribers this year.

This is a huge problem when you have large amounts of maturing debt over the next few years.

A recent Deutsche Telekom acquisition rumor offered some hope, but that appears to have faded. Facing a difficult road ahead on its own, the company better keep its lawyers on speed-dial.

MC/EV=41%

4. Macy's

Does anyone even shop at department stores anymore?

Same store sales will likely keep falling at Macy’s right through 2009. With $2.4 billion of maturing debt over the next five years, the company is trying to cut costs, and has already reduced its dividend.

Hopefully the US consumer will bounce back soon, and actually want to shop at Macy's.

MC/EV=47% ............(more)

The complete piece is at: http://finance.yahoo.com/tech-ticker/article/336235/Ten-Big-Companies-That-Are-Veering-Toward-Bankruptcy?tickers=AMD,LVS,S,M,GT,MYL,HTZ