I see you have based your "20%" increase on a comparison of 9 month to previous 9 month financial results. In my opinion it’s more common to compare Year end to Year end. If we do that and look at the Turnover achieved at those reporting periods, we have :-
Year end 6/2004 = $186.1 mil.
Year end 6/2003 = $179.6 mil.
Year end 6/2002 = $179.4 mil.
Year end 6/2001 = $180.8 mil.
Year end 6/2000 = $178.0 mil.
The percentage increase is now only 6.5% between 2003 and 2004.
In addition, if we want to look at TWIN’s recent trend of Turnover, we can study their ongoing Quarterly results :-
25/05/05 = $56.4 mil.
11/02/05 = $54.7 mil.
18/10/04 = $45.4 mil.
21/09/04 = $57.1 mil.
13/05/04 = $48.6 mil.
The latest Quarterly increase is 3.1%. If they can keep this up from now on, then prospects may be better. We’ll have to wait and see what their next set of Financial Results look like.
As I stated in my previous message, and as things stand, both period analyses look pretty flat, "up and down" and un-inspiring in my opinion. I personally don’t see a nice regular, uptrend in Gross Turnover, for whatever reason.
I use a company analysis strategy that I learned from my friend, Dr. Karl Posel D.Sc. Ph.D. He advocates that one should ensure that a company’s results etc..., satisfy 12 "Laws", or criteria, before one considers their stock for purchase (a sort of QUALITY TEMPLATE). Six of those "Laws" are based on critical financial ratios, each with a target percentage, obtained from within the Income Statement and Balance Sheet. A company’s ratios must equal or exceed these target percentages for it to qualify for further analysis (One tends to see above average companies exhibiting/exceeding these specific financial ratio criteria). If it does, the next step is to determine whether it’s currently under- or overvalued. If it’s the former, the final check is to determine a probable future price increase. If one now has a short list of 4 or 5 companies, the one we would target is that one showing the largest, probable price increase.
One of the ratios we would target is the EBIDTA/Turnover number, viz. Operating Margin, which takes into account both Cost of Sales and Running Expenses.
In TWIN’s case this is just over 8% in its last Annual and just over 7% in its latest Quarterly. We’d be looking for more than that.
If you, or anyone else, would like to see what companies can achieve, that consistently satisfy these 12 Criteria, you can go to the SI Board "50% GAINS INVESTING", and find message 41699, "That guy caught my interest also", by Sergio H. He kindly ? or inadvertently ? put a link there, that if you follow it, will lead you to a web site that shows you 3 examples of these companies. Wilson Baley Homes is currently at 3050 and Dawn is at 595. These 3 companies achieved between 96% and 154% price increases within a 12 month period. |
