CENL currently with strong fundamentals. IMHO, a short-term $40-60 range is possible based on the sales and earnings trends from the previous 3 quarters. (Numbers below may not be exact due to different methods of averaging the outstanding shares; not responsible for any errors in calculations). Interested in shareholders' opinions (pro & con) regarding CENL's continued growth potential.
Last 4 quarters: $2.41/share ($1.69/share excluding one-time electronics sales in latest quarter). Sales in 2nd quarter below exclude electronic sales.
Sales in millions/EPS (Earnings per share):
2nd quarter (Sep'00) Sales 16.5 EPS .72
1st quarter (Jun'00) Sales 13.9 EPS .49
4th quarter (Mar'00) Sales 12.7 EPS .06
3rd quarter (Dec'00) Sales 8.6 EPS .42
I believe the .06 cents/share was due to the higher cost of goods sold CENL had to put on its "books" due to the acquisition of the assets from INTC. If I gave them just 30% margins that quarter, they would have made approximately .34/share. Their margins in the other 3 quarters have been between 39%-41%.
If CENL continued their earnings and sales trends over the next couple of quarters, the company will crush their previous year's numbers. The 3rd quarter Dec '99 only had 8.9 mill in sales, while the 4th quarter Mar '00 earnings were depressed due to the higher costs of goods sold).
Basically, the last two quarters account for $1.21 of the $1.69 trailing 4 quarters EPS. Even if the company just matched these numbers, the company is around $2.42/share.
As previously mentioned, IMHO a very conservative P/E of 20 would equate to about $34/share based on the last 4 quarters. Taking this P/E over potential estimates for the next 2 quarters, and it translates to $48/share.
What should be the P/E for CENL. I'm still of the opinion that 20 is conservative but I guess takes in account the risk of a small company. However, the reward part of a small company is it's capitalization is still small and the potential growth seems significant? The comapny grew earnings (quarter over quarter) 47% last quarter excluding the higher margin electronics sales. That's one quarter, forget about potential year over year growth.
Obviously, there are plenty of risks with a small company and any new investors should really think twice about their ability to take this risk. My contention is their may be huge potential rewards if Centennial management are able to continue their growth and keep with new advances. I have little insight into this area but I'm glad their associated with INTC.
I don't have a great feel regarding their maintaining earnings and sales growth. But if this small capitalized company does continue their strong growth, and I gave them a P/E of 30-40 based on them attaining the estimated $2.42/share, we're looking at a $72-$90/share stock price. But would we ever give CENL this type of P/E??
Well for the 6 months ended Dec. 1996, the "old & forgotten" CTN bogusly posted sales of $51 million & earnings of .33cents/share. I believe this is when valuations were around the highest ($50-60/share). With 18.2 million shares, the company's market cap was around $1 billion. If they met the .33 cents in the next 6 months, CTN was looking at a P/E of 60-90.
My main point, IMHO I think the potential reward for this stock still outweighs the risk. Is this one us little investors could finally make 500-1000% from the $5-$6 lows instead of the insitutions? Opinions anyone - no hype requested or needed on this board, just want to get a better idea of the flash memory market. |
