Larry,
Normally I wouldn't waste anyone's time, especially my own, responding to a Yahoo post. This one was a rare exception - well reasoned with generally quite valid points. So here goes.
1. Revenues and earnings are unpredictable and show no consistency
1/2 marks. They're certainly less consistent than CSCO, but not much worse than most other players in the sector.
2. The stock has had a remarkable runup ... well ahead of the fundamentals.
Growth stocks always look expensive from a fundamental perspective. Look at DELL, CSCO, MSFT, etc. NN is still extraordinarily cheap relative to its peers and lesser stocks in the sector.
3. There is no certainty that the company can show stable revenue and earnings growth...
Absolutely true. Same is also true for CSCO, LU, ASND, NT, ...
By the same token there's no certainty that NN WON'T show accelerating earnings growth.
4. The stock is already trading at a PE of 30 based on forward earnings
On Feb 3rd then forward looking P/E based upon a share price above 33 was 27. At today's price the forward looking P/E is under 22; which is much less than the market multiple; for a stock which is growing much faster than a market multiple.
I would like to think that my good buddy at Canaccord is responsible for this buying opportunity. However, I suspect that the earlier poster that equated this company with toilet scum may have had a valid point. I doubt that they could influence the price of anything that doesn't trade on the ASE (Alberta Stock Exchange, not American).
5. The company has stated that they WILL NOT be able to recover the lost revenue ...
I heard exactly the opposite in the conference call. The company said it was not changing analyst guidance for the full year. To me this indicates it will make up the lost revenue. Otherwise the year's numbers would have come down by a nickle.
I may be mistaken.
6. The company stated in the past year that it forecasted strong demand in ATM sales, yet they totally mismanaged ...
That is this Yahoo's opinion. Mine is different. He's entitled to his. Time will answer who's opinion is most predictive of the stock's behaviour.
7. The company has difficulty managing growth but must also manage growth accompanied by declining sales of legacy products.
Five Year Selected Financials History: Fiscal Year Ends on April
(in millions) 12mos(2) 1998 1997 1996 1995 1994 1993
Revenues 1114.4 1132.0 986.0 676.7 590.4 399.6 242.0
RevenuePctChg
(vs.YearBefore) NA 15 46 15 48 65 NA
Need anything more be said. Yahoo is a YAHOO!!! |
