Hi James...Thank you for posting.
I am in fact sleeping very well as I see this stock forming a base at these levels with a decreasing gap in both the daily trading range and bid and ask spread.
I did not think my responce to Pierre was particularly hostile. He just clarified my interpretation of "substantial amount" but totally missed the point of my prior post, that even a small shop printer was excited about PRST and recognized the future potential by purchasing shares.
I agree to a point that the conflict here is in the price. It is also a question of value. If one is short PRST, there is no value or reason for even it's current price....If you are long PRST, the idea of the reoccuring income to be generated by PRST plate revenue can be mind boggling if PRST only captures a small percentage of the market. This is a point that is too often forgotten and seems to be discounted by many concerned with the current, (todays) stock price.
Many that short this stock say those holding shares believe a fantasy and live in a dream world. They state that PRST has no chance or even a possibility of growth from sales of their technology, which is represented on each Quickmaster DI to market. The short position says everything from future competition, age of company management, SEC investigation and continious negative press will capsize this company to worthless value.
I say it is time they open their eyes to the fact that PRST does have a respected recognized product and has been stating astounding increases in revenue each quarter as follows: Q2-95=5.5M, Q3-95=7.6M, Q4-95=9.4M and Q1-96=11.0M
They don't agree that the actual PRST bread and butter is from the reoccuring PRST plate income, which is only now just beginning to show in revenue. The sizable income numbers that will support PRST stock price will happen as revenue numbers continue to increase substantialy, as more and more presses go on line and start using the PRST plates.
Heidelburg Quickmaster DI production is now increasing to meet the demand and will be soon be produced in assembly line fashion. Everyone of them will be using PRST plates. As these presses are being installed and the PEARL platesetters are being fitted for other existing presses already on the market, earnings will soon support the stock price. This is the opinion of many that are long in the stock and is unacceptable to the short position, most looking no further than the last quarter net income report and current price to form an opinion. It is future income potential which many have recognized as being reality that is the actual support to this stock.
The owners of this stock include those in the print trades, institutions, insiders and many individual investors that recognize the direction the industry is headed now and believe that PRST can produce the product and meet it's potential, by satisfying the present demand requested by those in the print industry.
Certainly, there is no disputing the stock has (and is even now) traded above and beyond normal accepted current market valuation and therefore the stock trades with a high current P/E Ratio. The short position cannot understand why the stock is not trading below $10.00. Could it be that there are many believing PRST will produce the earnings that will demand a much higher stock price in the future?
15,086,000 shares are owned by those betting it will rise. 2.2 million are short.
It is important to realize that when the income from plate usage from the recently installed presses and platesetters now using PRST plates is added to the many presses that were back ordered and now being produced and installed, the new revenue to PRST will provide quarterly earnings reports which will compute to much higher stock valuation than todays prices. It is this known factor of future higher income that is PARTIALLY why PRST rose to the stratosphere in May, along with the momentum investors squeezing the short position before the correction and reality in price set in. It is also why there is support of the stock price at this current level by those refusing to sell and others still buying today.
For every press that utilizes the PRST plates, it is conservatively estimated as follows:
GROSS earnings to PRST per Plate used is stated to be $9.50. (About $2.15 NET is the low estimate per plate)
A Quickmaster DI uses 35 plates per day, with estimates representing $332.50 per day GROSS sales or $75.25 daily NET income.
Based on a conservative 255 work days annual - (using only one shift), Each press could provide PRST an estimated $84,787 potential GROSS in plate sales or a conservative estimated $18,812 NET income annually.
How many presses are now opperational? The lowest estimated at this time that I can locate is approx. 250 presses now using PRST plates. Increased production of Quickmaster and sales of conversion kits to existing presses will increase this estimate to 950 in 12 months and 2500 in two years. (If I used Cabot's estimates it would be much, much higher).
Plate income then is expected to return the following income:
At the present time, 250 presses equal $4.7 Million NET annual, 21.2 Million GROSS. If PRST just annualized it's last reported quartery revenue of 11 million with no increases or additional plate income, they stand at $44 million or 2.91 income per share - gross.
In one year, 950 presses = $17.9 Million additional NET from plate revenue or additional $80.5 Million Gross.
In two years, 2500 presses = $47 Million NET from plate revenue or $121 Million GROSS.
The above plate revenue is on top of the present and future income from Quickmaster DI kits, of which 100 additional will be sold to Heidelburg before 96 year end, with estimates of an average of 40 per month beginning Q2, 1997. Add to that sales of the PEARL platesetters etc., all equate to additional millions in bottom line income from those future sales. Alas....Higher stock prices.
Even if this stock trades at a more reasonable EPS of 40 a couple of years in the future, this stock would certainly be undervalued at these present prices in the 60s and would have to be much higher if only just from the plate income within two years. Some will call this hype...but it is what I have based my reasons for buying and holding this stock.
There will always be difference of opinion until the future provides the true picture of the future of Presstek.
In the short run, the more stable the stock becomes in the days ahead as it again forms a base, the more the short position should become concerned, as there are many waiting for earnings and revenue announcements later this month, prior to taking a position in this stock.
Neil
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