Inside Wall Street
U-HAUL: ALL SET TO STEP ON THE GAS
U-Haul is a fixture on America's roads: the vehicle of choice for cost-conscious folks on the move. And now, U-Haul International's little-known parent, Amerco (AMOO), trading at 18, is a choice gf value hunters, too.
"Amerco is one of the best-kept secrets on Wall Street, even though U-Haul is one of America's best-known franchises," says F. Van Kasper, president of San Francisco's Van Kasper & Co. He thinks the stock is worth 30 based on improving fundamentals and 40 based on breakup value.
Since 1988, investors have been wary because of a legal battle among family members who control the stock. On Nov. 1, however, Amerco agreed to buy back 14.9 million shares, or 38% of the stock, from founder Leonard Schoen and five of his children. That will leave Chairman Edward Schoen, one of the sons, and other members of management in control. The settlement will reduce shares outstanding--and crimp fiscal 1996 earnings (chart). Van Kasper puts Amerco's book value at 29 a share based on the reduced shares of 21 million. In 1995, revenues were $1.2 billion.
It's a "win-win situation for shareholders," says Van Kasper. He expects Edward Schoen will buy more shares and take the company private--offering a good price to shareholders. Or the company may remain public. Even so, "U-Haul's prospects are tremendous," says Van Kasper. U-Haul has 60% of the do-it-yourself market, he notes, and more growth could come through increased market share.
U-Haul operates 80,000 trucks and 91,000 trailers, rented out through 1,100 company-owned and 12,400 independent locations. And it has a public storage business, which owns the land and buildings of the storage facilities. Amerco also owns Republic Western, a property-and-casualty insurer, and Oxford Life, which combined account for 10% of Amerco revenues.BY GENE G. MARCIAL