Guten tag, Herr Kronemann!
re: Elbit Systems Ltd.- ESLTF/NASDAQ listing
I received my first issue of Czeschin's Oil & Energy Investment Report in March '97. Since then, together with the monthly issues, I've received a flyer describing the other service he offers on at least three occasions. As you mentioned in your first posting, you were wondering what Israeli hi-tech firm this was, that RC was describing in such glowing terms. Your sense is that the company is Elbit Systems Ltd., which is what I have also concluded, but with a question or two remaining. Now, I'll share with you the substance of what I have learned in the past week or two, before seeing your posting. (I suspect that you already know most of this! But perhaps it will be useful to others.)
The Elron Group in Israel has undergone some major reorganization in the past year or two. Today, Elbit Systems (ESLTF) and two other companies, Elbit Ltd.(ELBTF) and Elbit Medical Imaging Ltd. are each owned 40% by Elron Electronic Industries Ltd.(ELRNF), which is apparently synonymous with The Elron Group.
ESLTF began as an independent company on 1 Jan 96, as a result of the "demerger" of Elbit Ltd. It apparently started out as ESLFV, but changed to ESLTF on 29 Nov 96. They list their 8 "Lines of Business" on their web site (www.elbit.co.il) as Aircraft Upgrades, Helicopter Upgrades, Avionic Systems, Unmanned Airborne Vehicles, Naval Combat Systems Integration, Combat Vehicle Upgrades, Command-Control-Communications and Simulators, and Security Systems.
Financial data ($millions, except per share amounts)
98(EST) 97(EST) 96 95
Revenues 353. 307.5 299.8
Net Income 20.1 18.0 24.2
EPS 1.12 1.03 0.84 1.14
Dividends 0.20 0.0824
Est. of Revenues and Dividends are mine (sum of last four quarters, and extrapolation from first two quarters, resp.)
Est. of EPS is from Sahar Securities (Tel Aviv?), 11 Aug 97, the only analyst tracking this stock that I have been able to find. They apparently had estimated $0.95/sh for '97 and $1.06 for '98 earlier, but raised their estimates on 11 Aug. Sahar also predicts a price range of $16.50-18.00 in the coming year, based on a P/E ratio of 16. So, in contrast to RC, Sahar is certainly not very bullish on the price of this stock!
Company reports
The '96 report (yr. and 4Q) was released about 1 Mar., three months after the close of the year. The 97 quarterly reports for Q1 and Q2 were released just about two months after the closing of the quarter.
In a PR dated 8 Jun 97, the company president and CEO, Joseph Ackerman, said "The year 1997 will be better than 1996."
Stock
There were 21,386,130 shares outstanding on 30 Jun 97. In the Q2 report, there is also mention of "Shares in respect of employees stock options," of 1.183 million, which gives a total of 22.569 million. (The company used this total in calculating the $0.43/share net earnings for the first half of '97.)
On 30 Jul., the company announced that they had filed with the SEC to register "up to four million ordinary shares, of which the company will sell three million shares and the remaining one million shares will be sold by subsidiary Elbit Defense Holdings Ltd." Hence, after this offering of 3 million new shares is completed, about 24.4 million shares will be outstanding, with another 1.2 million forthcoming if employee options are exercised.
Czeschen's description - key words
Hi-tech Israeli arms manufacturer (OK, and description of various products seems to match up well with company's web site "Lines of Business")
Growing 33% per year (??)
Revenues: 24% Israeli, 76% foreign (OK)
Has a large US subsidiary (EFW = Elbit Fort Worth?)
Is a recent spin-off of a large Israeli conglomerate ($1.3B, Elbit Ltd.?)
Is listed in the US (true, together with several other Israeli companies belonging to the Elron Group)
Backlog "approaching almost $1 billion." ($636 million, 30 Jun 97)
Pays dividends (OK)
P/E = 12, price "under $20" (OK; P/E is now about 16)
Question: Where does RC get his 33%/yr growth rate? Revenues are not growing that fast, and earnings this year will be lower than '95 and only up 12% over '96. This is really puzzling, since everything else RC says seems to fit quite well. Any comments?
Regards,
The Sunny Investor
31 Aug 97 |
