Wow. ARCI just earned $0.22 per share. That's puts trailing two quarters EPS at $0.33, and they're positive Q4 will be profitable also, which I expect to be up to $0.05, along with Q1's possible $0.05. Huge turnaround. A big contributor to this consecutive turnaround quarter is the Los Angeles Dept of Water and Power refrigerator recycling contract which started in Q3, adding a few hundred thousand more recycling revs over Q2.
But ARCI also shut down another (unprofitable) smaller appliance store, boosting the retail margins, and possibly putting the entire retail division in the black. Next year, it seems likely same store sales can grow 15-30%, Edison will renew for a higher level (if past trend is an indication), and L.A. DWP contract goes until late CY2000 I believe, and may be renewed or lead to other biz.
If 99Q2/99Q3/99Q4/00Q1 EPS is $0.11/0.22/0.05/0.05, that puts trailing 12-month EPS as of end 00Q1 at $0.43, which gives ARCI at $1 1/8 (today's closing price) a forward P/E of 2.6. We should be at a minimum of two to three times that by next summer: $2-5 per share.
If ARCI were to trade for a fair value, it would be at $4-5 by next summer, which would be 10 times EPS and one times revenues.
They're now generating good cash ($500,000 in Sept Q?), they now have almost $500,000 in working capital, equity doubled from last year, and they're now self-sustaining.
From these levels, I can't help buy think ARCI is an easy 10-bagger in a couple years, and an easy 5-bagger by sometime next year. I love these guys. They've finally done it, and those who understand what's going on have an excellent investment opportunity at $1, which is 1-2 times forward earnings looking out a year or two. |
