You have been comparing Gum Tech to Quigley for nearly two years and Quigley still doesn't have a functional chewing gum business. Quigley doesn't even have the expertise to make nicotine gum, dental gum, or other functional chewing gums. An analogy would be to compare Warner-Lamber, maker of Halls Cough Drops, to Quigley just because both companies make lozenges for the common cold. There is absolutely no similarity between Quigley and Gum Tech in terms of overall products, financial condition, sales growth, earnings potential, strategy, management, and a host of other factors.
You continue to talk in generalities about cash flow as if you know something. I have asked you umpteen times to post your projected cash flows, but still nada. If you haven't projected future cash flows, then your opinion about the "intrinsic value" of GUMM based on future cash flows is worthless and uninformed. Based on a simple price to sales analysis, GUMM is very reasonably priced now. The stock is trading at 6.9 times trailing twelve month revenues vs. 7.8 for the S&P 500. When you put this into the perspective of revenue growth, I believe that GUMM is undervalued.
Growth Rates(%) Gum Tech S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago 34.45 25.97
Sales (TTM) vs TTM 1 Yr. Ago 142.19 24.22
Sales - 5 Yr. Growth Rate 51.50 21.23
Yes, making a profit is important but the writing is on the wall that it is coming. Gum Tech's gross margin (TTM) is 56.5% vs. 50.4% for the S&P 500, and this includes Zicam and gum. Once the volume in the gum business increases enough to offset their operating expenses, the profit will silence your uniformed bashing in a second. Due to the fact that they are only operating at about 10% capacity on the gum side and most of their operating expenses are fixed, sales of gum could increase substantially with very little increase in operating expenses. With zero debt, the profit from new gum developments that are on the way will hit the bottom line even faster. In addition, the gross margin on Zicam is about 70%, which obviously would increase the company's overall gross margin if sales of that product increase relative to gum sales.
BTW, I spoke to Lynn Romero about the comment in the press release on the preventative and she told me that it could be out sooner than a year, but that they wanted to eliminate the expectation that it would be out in the next month or two. IMO, they have now incorrectly set an expectation that it will be out in a year or more, since it could be out sooner. I disagree with the way this was worded and told her so. It is just as bad for people to wrongly think that it might be out in a month than it is for them to think it might be out in a year or more. The reality is that the independent researcher controls the timing to a great extent and it could still be out this cold season.
It isn't surprising that Hank misleadingly filtered a positive forward looking statement out of the press release. Who do you people (used as a figure of speech) think you are fooling?
Message 14672646
Here is the statement that Hank omitted for some unknown reason:
"We are diligently working to add new customers and are optimistic that our R&D work on a variety of gum products with major customers will come to fruition very soon."
Given that the company made a concerted effort to reduce expectations about the preventative clinical study, I seriously doubt if they would falsely increase expectations regarding new gum customers. I read this to mean that we will see a major new gum announcement "very soon". If they announce a dental gum contract with a major consumer products company, and expected sales are at least $10 million within two quarters, I think the stock will trade to about $20. |
