JLNY --- Full Research...$67 million in revenues...this one looks very good IMO.
JENNA LANE, Inc (OTCBB: JLNY)
1407 Broadway, Suite 2400
New York, NY 10018
Phone: (212) 704-0002
Fax: (212) 704-0139
COMPANY SNAPSHOT...
- $67 MILLION is annual revenue
- Only 2.2 million shares in the float
- A Price of UNDER a buck!
- A Book Value of $1.93
- Sales for the first 6-months of their fiscal year are UP 23%.
- 52 WEEK: Low $0.375 ... High $3.375
WEBSITE: jennalanegroup.com
recent price: $0.875
CHART:
bigcharts.com
SEC FILINGS:
sec.gov
SHARE INFORMATION
- Outstanding: 3.98 million
- Float: 2.2 million
- Preferred Shares: None
- Insider Ownership: 45%
KEY POINTS
- SALES INCREASING: For 6 months ended 9/30/99, sales UP 23% to $38.1 million.
- ANNUAL SALES (ttm): $67.6 million
- MARKET CAP: Around $3 million
- BOOK VALUE: $1.93 per share
- PRICE TO BOOK RATIO (mrq): 0.21 (Industry Avg is 3.36)
- FLOAT: Only 2.2 million shares
- CURRENT RATIO (mrq): 2.44
- DEBT / EQUITY RATIO (mrq): 0.18
- OUTSTANDING SHARES ARE REDUCED: Company has bought back over 400,000 shares in the past year.
- NEW SUMMER LINE COMING SOON: As per Customer Service
- Shares are trading under a buck on very light volume.
BUSINESS SUMMARY
Jenna Lane, Inc. designs, manufactures (mostly through contractors) and imports women's and children's sportswear. Brands include Jenna Lane, T.L.C. for Kidz, Stressed Out, Smart Objects, JLNY, and Bongo.
They sell through major retailers such as KMart and Charming Shoppes and other department stores and specialty retailers. They also sell online through styleclick.com. JLNY now does 65% of its business as retailers' private labels; and the licensed Bongo brand. Its Impatiens division designs dresses. Founders Mitchell Dobies and Charles Sobel together own 31% of the company.
JLNY had positive earnings in 97 & 98, but had accounting problems in FY 1999 that raised concern. They hired a new President and conducted a financial review. Results of that review are expected soon and were expected to reduce earnings for FY 1999 and increase earnings for the first 6-month period of FY 2000 ended 9-30-99. These events have taken their toll on the stock price and it has declined significantly from its high of nearly $10.00 per share just 2 years ago.
Has the stock price started to turnaround? For the 6 months ended 9/30/99, revenues increased 23% to $38.1M. The company showed losses for that period, but those losses may be upgraded as a result of the financial review. According to a recent press release, "A restatement, if it occurs, may result in a charge to earnings for the fiscal year ended March 31, 1999 and an improvement in reported results for the six months ended September 30, 1999."
JLNY had a company employee driving a company owned truck that struck and killed a person. The estate of that person filed a $10 million lawsuit against the company in Oct 99. The company did not make clear what their insurance coverage was relating to this incident. However, the company liability insurance for such events is now thought to be $4 million. Insurance attorneys say most lawsuits like this are settled at or close to the limits of the insurance coverage, however, there can be no assurance or guarantee of this. What effect a misunderstanding of the insurance coverage may have had on the stock price is unclear.
Interestingly, this industry has a 3.36 ration for Price to Book Value. That means the share price in this industry averages 3.36 times the Book Value.
JLNY's Book Value is $1.93. If that ratio was applied to JLNY, a proper value for the stock would be about $6.48 per share based on this industry average.
If the financial review shows favorably for the first 6 months of FY 2000 as indicated in the recent company press release, and with a Sales Growth Rate of over 23%, could JLNY see a stock valuation more in line with industry
averages?
A $70 million company with a float of only 2.2 million shares should be interesting to watch.
Is this stock overlooked and undervalued? I definitely think so.
Dexx |
