Caught on the fence. Short or long?
We all know Intel, AMD, Cyrix, and just about all other semiconductior/microprocessor issurs have been on a tear. Just last week AMD jumped to $34, CYRX to $25. Well, it just so happens the photomask group has been performing quite well also.
One issue I am considering playing this week is DPMI--DuPont Photomask. Earnings per IBD are due out Wednesday before the bell.
DPMI makes photomasks--crucial components in the semiconductor
manufacturing process because they contain the pattern of electrical
circuits and transistors that are etched onto the surface of raw
silicon to create products, such as microprocessors and Dynamic
Random Access Memory (DRAM) storage chips. Photomasks serve as the
master template from which semiconductor wafers are created before
being sliced into individual chips.
Ok--so know you can see why a stock like DPMI is on a tear.
Take a look at its chart:
pcfn.com
DPMI came public in June at $17 a share. Its parent Dupont owns 72% of the company after the IPO.
Now lets look at some numbers here:
Shares Outstanding: 15,455,651
Close Friday: 57 3/4 x 58 1/4 on 325k--intraday range 54 1/2~61 1/2
Market cap close Friday: $900 Million
Ok--here are last Qs results for the period ended
Reuters, Monday, October 28, 1996 at 11:30
ROUND ROCK, Texas, Oct 28 (Reuter) -
DuPont Photomasks Inc.
Statement of Operations
(unaudited,$ in thousands, except per share amounts;
quarters end Sept. 30, 1995 and 1996)
Pro Forma
Q1 Q1 Q1
1996 1996 1997
Sales 46,039 46,039 64,244
Cost of goods sold 32,192 31,774 38,939
Selling, general and
administrative expense 5,869 5,990 8,310
Research and development expense - net
2,458 2,045 2,438
Other operating expense - net 633 494 817
Operating profit 4,887 5,736 13,740
Interest (income) expense 1,832 46 (200)
Exchange loss 230 121 304
Income before income taxes and
minority interest 2,825 5,569 13,636
Provision for income taxes 454 1,949 4,773
Income before minority interest 2,371 3,620 8,863
Minority interest in loss of
majority owned joint venture (55) (55) (152)
Net income 2,426 3,675 9,015
Earnings per share 0.24 0.58
Weighted average shares outstanding
15,194,193 15,455,651
They did 64.2 Million in sales, earned 58 cents a share.
Estimates for last qtr were 46 cents--so they just blew away the Street by some 25%.
The quarter before that, estimates were for 39 cents and they came in at 50 cents.
Now--Earnings coming up Wednesday. This quarter will include sales in October, November, and December. Estimates for this qtr are for 54 cents--Hell, they did 58 cents last Qtr.
My question is this--
Is DPMI a buy here going into earnings. The stock has a Market Cap of $900 Million yet is only turing out $64 Million quarters. However, with such a lowball estimate at 54 cents when we know the Oct-Dec cycle was huge for semis--and therefore probably just as huge for the photomasks, it would seem to me that DPMI could do in excess of $70 Million in sales--and applying the same gross margin from last qtr--would bring DPMI in at close to 63-64 cents~~obliterating the 54 cent estimate by 10 cents.
On the fence on this one--dont know if its fully valued or if its got room to $70.
Mills. |
