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Strategies & Market Trends : Experienced Investors

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From: greenehugh	9/29/2005 3:33:52 PM
	of 90

HOM raised guidance today. Here is an analysis from SI: "the real significant detail IMHO is a tiny tidbit. Before the hurricane related impact, HOM guided to $60m in the current structure. Now they guide to $70-75m. However it seems that this increase of $15m is the consequence OF A SINGLE QUARTER !! Now this is really significant. It boils down to the fact that HOM might be able to ANNUALIZE these $10-15m in 2006 going forward. If true, the cleanup from the disasters might add around $50m annually to their top line. Means, we should plan FY2006 revenues of around $100m without any additional acquisitions. It also looks like that HOM might be able to do the FERS acquisition FOR CASH, BANK DEBT or with minimal dilution. The PR at least doesn't mention a convertible or an equity component. My take - HOM is certainly good for a PSR (Price/Sales ratio of 3-4, don't forget there aren't many high-margin (GM around 40%) service, remodeling and resoration plays out. We should thus envisage a marketcap of $300-400m here going forward (on my estimated FY2006 revenue level of $100m). If more growth or more acquisitions are coming, then this should be adjusted upwards of couse "

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