Nice move today, especially late as it surged to a 13-1/8 daily high.
Too bad it did not close there.
OK CHPS fans. I'll take a stab at CHPS coming in with 22 to 24 cents
in earnings (this assumes they are not yet fully taxed) vs. Zacks
consensus of 17 cents.
Summary of analysis:
March 30 actual case 1 case 2 case 3 case 4 case 5 case 6
Revenues 37,759 35,871 37,003 37,759 39,646 35,871 35,871
Change in Revenues - 5% - 2% flat + 5% - 5% - 5%
Gross Margin % 45.92% 45.92% 45.92% 45.92% 45.92% 45.00% 46.5%
Earnings .22 .22 .23 .24 .26 .21 .23
(w/o AMD)
Fully taxed earnings .15 .16 .17 .19 .15 .16
Assumptions:
1. Gross Margin holds at same percentage as last Q, unless noted
otherwise. It is possible they could have introduced some new
product to help support margins (unlikely though) or worked with
suppliers to further improve margins. Case 6 scenario has GM
increasing to levels of 2 quarters ago.
2. R&D spending the same as last quarter at $6,207K - no change in
spending, although I might expect to see some increase - up to a $6.4
M perhaps. This is the bet on the future. Any increase here support
future earnings and I'll take increased R&D over a penny today.
3. Selling and Admin costs drop to as a percent of sales to 15%.
Last Q was much higher than historic levels, likely due to the
significant drop in Revenues. Prior 2 quarters before last Q were
slightly over 15% with earlier quarters running under 14%. Knowing
and planning for revenues to be down provides an opportunity to
manage this cost. I expect they will do so - to at least this level,
perhaps even lower as a percent of sales. Remember, these guys won
an award for financial management. Lets see if they can live up to
the reputation.
4. Interest income of about $800,000. This is likely higher, in the
range of $1M to $1.3M with all the cash and short term investment -
Assume $60M invested at 5.5%, would give about 800K quarterly.
Amount earning interest is likely higher and the return is likely
better as well on this large an amount of cash.
5. Tax still at 10% for this quarter (fully taxed numbers provided
as well)
6. Assumes shares outstanding at 23,500K. Up from last Q's 23,145K
Thoughts
Compaq had a nice quarter. Computer sales were strong. Perhaps
CHPS's quarter started lousy, but ended strong. If revenues did not
decline, but stayed flat or increased slightly, I don't think CHPS
would make any announcement - just wait till earnings.
July has more or less been the start of runs upward. Looking at a
rough chart for the last couple years, it looks like July 1994 the
low was 4 running to a high around 15 in july of 1995. Then back
donw with a low area ending in June/July 1996 when it started the
run to 26. Is July 97 the start of a new trend making it 3 for 4?
Or is this just a run up to earnings with nothing to sustain the
price?
Zacks has CHPS at 17 cents - don't know if this is fully taxed or not.
If not, it is likely very low. If fully taxed, it is in the ball
park.
Enjoy.
Comments?
Dan |
