Hi MJ - just came across this board, long from 11's in IDCO and kicking myself for not getting in earlier.
Yahoo board had this excellent post on IDCO cash flow:
IDCO is a cash generating machine!
by: tangram_ca (38/M/Toronto,ON)
Long-Term Sentiment: Strong Buy 10/26/01 03:31 pm
Msg: 25699 of 25710
The way to look at this thing is on a multiple to operating cash flow basis. Why? Well, EPS are low because of large amortization charges. Much of that will vanish with the new FASB rules regarding goodwill but for the time being, best to look at operating cash flow. This is effectively the same as looking at so-called "pro forma" earnings, which is how most tech companies are valued today.
Based on the 9-month results, operating cash flow (before working capital adjustments) for the current year should be in the order of $110 MM. With 89.6 MM shs o/s, that works out to $1.23 per share of operating cash flow. There is no debt and $92 MM of cash on the balance sheet.
At $13.90, IDCO has a market cap of $1.25 b. Net out the cash and you get an enterprise value of $1.15 b. This translates into an enterprise value/operating cash flow multiple of only 10x. Considering this is not a capital intensive business, IDCO is a cash-generating machine.
What's so beautiful about this stock is that there is NO sell-side coverage. In addition, because of the low reported EPS (because of the large depreciation charges), it is below most "screens" that investors (including some institutions) use.
What will the FASB goodwill changes do to earnings next year? Good question! On the CC, they mentioned that amortization will be only $15-$20 MM for the year, compared with about $89 MM this year. So, assuming no growth next year (highly unlikely), you can expect reported EPS to go from $0.10 this year up to $1.10 next year!!
IDCO IS ONLY TRADING AT 13X CURRENT YEAR EARNINGS!!
I love this stock. |
