David,
Supposedly, the recent activity has been due to downward earnings revisions. Supposedly, the company purchased less air time in October and November because they thought advertising rates were too costly. This year's earnings (according to one analyst) have been revised from .95 to .81 and next year (march 98) down from 1.21 to 1.10.
The company is negotiating a more favorable advertising agreement. Typical reaction to a long-term good, but near-term not good/neutral.
The stock is trading at 8.75, which is 11x this year's estimate, and 8x next year's estimate, according to this analyst, George Sutton, who has consistently proposed lower EPS for the company than other analysts. I wonder if people have been selling the stock with privileged information. It seems that the bad/neutral news comes out days and weeks after the stock falls. My general opinion is that the big shareholders of this company (primarily the funds) who are responsible for the recent cave-in, and have been depressing it all year, are a bunch of impatient cowards. There is now reason that is publically known that this fine company should be selling at such a low price. As sad as it is, a stock is only as good as those who trade it. If people constantly sell and never buy, it makes no difference how good the company is, the stock will languish, or in this case, implode.
The law suit bears no material relevance. National Media has indemnification from the company from whom they licenced the Ab-Roller Plus. Any lost sales or legal costs will be paid to NM by this company. All I can say is that I hope all the idiots get out of the stock and leave only serious investors; once this happens, the price should climb. I am not selling, that's for sure. I don't know if I will buy more here, though.
-Todd |
