Wow- what an opening.
I still don't understand the market. I don't think there was anything in the earnings report that was all that surprising. The consensus was 32 cents, and the actual came in at 36 cents, but the consensus must have been shaky given the uncertainty in the financials. The revenues of $197M came in a bit below the $200-205M I was expecting. These numbers were expected, and should have been in the stock price. Yet obviously these factors weren't. If the market is this stupid, it should be easy to make money in this sector.
The most surprising thing is the extent to which the balance sheet is loaded with debt; all the debt they took on to add 770,000 square feet of manufacturing plant in the first half is there. I get an atrocious D/E ratio well over 2.
The debt required to build the new SJ, China, and Mexico facilities hit the sheet last Q, but the income from these new facilites will begin this Q, and really ramp next Q. So we're looking at two significant sequential revenue and profit increases over the next two quarters.
I guess the analysts are finally allowing themselves to look forward. Interseting, for six months, all the news is interpreted in the worst way, even though there was really a much more positive interpretation. Now, all the news is interpreted in the best way. And we have more good news coming. Looks like Marks has won his "bet" on a rapidly expanding ECM sector, and we, the shareholders stand to benefit.
This is my largest ECM sector holding, and now we get to "Do a Nissan", and "Enjoy the Ride" (getting away from the train metaphor).
Paul |
