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Strategies & Market Trends : Value Investing

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From: MikeS97707	12/2/2008 12:51:54 PM
	of 78744

I believe that IECE is setup for a double to triple over the next year. I'm estimating pre-tax EPS in fiscal 2009 will be in the $0.45 ballpark. That makes them quite undervalued at the present price of $1.60. Here is some more DD: 1. *Excellent Earnings* - IECE reported EPS of $0.91 and pre-tax EPS of $0.09 for Q4 (Sept.). The operating profit in Q4 was over 7 times that of the prior year! 2. *Guiding for Growth to Continue in Fiscal 2009* - They are guiding for increased revenue of 70M next year. That is a 17% revenue increase from annualized Q4 revenue. If margins remain constant from Q4 I estimate pre-tax EPS for fiscal 2009 of $0.37. However, I think they will improve margins as they just started with integration of Val-U-Tech. Integration efforts with Val-U-Tech are expected to be completed by the end of 2009. Given that I would swag that pre-tax EPS for fiscal 2009 will be $0.45. Additionally a recent investor presentation indicates that they are laying the ground work for $100M in revenue in the near future and they expect the core business to grow 15+% per year. siliconinvestor.com 3. *Big Backlog* - Backlog at September 30th was $40.5M which is roughly 80% of sales in 2008! siliconinvestor.com 4. *Strong Book Value* - IECE has a book value of $1.87/share. As of 11/28/08 it was trading for less than book value. 5. *Empire Zone* - IECE has applied for an Empire Zone. If they are granted this empire zone which is likely they will increase their margins due to the tax credits. siliconinvestor.com 6. *Insider Buying* - Over 27K shares were purchased in the first week of September by the President of Val-U-Tech. Those are very significant purchases for a company of this size. siliconinvestor.com 7. *Additional Acquisition* - Per a recent investor presentation they are looking for additional acquisitions. More DD can be found here: siliconinvestor.com Mike

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