NENG is not to be understood. They made their numbers, basically. They reduced dependence on EMC but got renewal of the EMC relationship. They stated that they would increase R&D through September to implement the next EMC box (but this was known days ago). Cash flow is up. Yet, the stock crashed. Why? There was nothing new disclosed today. I can't imagine a serious, knowledgeable and experienced investor selling NENG on today's news. It must be a bunch of less serious, less knowledgeable, less experienced amateurs.
This company has more than $1 in cash+A/R-A/P and will still be around $0.94/share after the R&D investment this present quarter. So, the stock is valued at around $0.80/share. Now, if we ignore the noncash writeoff of good will last December, the earnings look back last 12 months are around $0.11/share. So, the P/E is 7.???? Yes.
Now, Jake, you might want to look this up... Back in Sept. of 1972, I bought a pile of Teledyne (TDY) for $8/share. The analysts were saying that TDY earnings were a manipulation (all done with mirrors,etc.). I had worked for these guys and felt that the earnings were real. It turns out that I bought at a price to earnings of just 2. A few years later, TDY was at 80. I finally sold during the 1980's at around $250/share .
The market can be wrong. It is not an efficient estimator of value. Does the market base stock prices on the state of a company 9 - 12 months from now? No. |
