I've been reviewing the financials for the last year.
Deswell traded down again today albiet on low volume. I still think DSWLF should be trading several dollars higher than Nam Tai, considering the dilution effects of the rights offering. Deswell hasn't rebounded much at all from last week's sell-off. Best thing that I can think of why this is happening, is that Deswell still doesn't have the street visibility NTAIF is now starting to get. These stocks really should be moving in tandem, and they do more or less. When one lags, usually thats usually a good buying opportunity (as we have seen).
But I also wanted to double check the question you asked earlier, to see if I could predict SepQ revenues and earnings better, especially compared with year ago periods. I checked last year's earnings report date; they reported on November 11 last year, and they reported 46 cents on 4.7M shares out. Since then the number of shares out used in the calculation has increased since the warrants are now in the money and are used to calculate fully diluted earnings.
Last Q the revenues were 14.6M up from 12.7M in the MarQ and 13.3M in last year's DecQ. The March Q is always impacted by seasonal factors, so I like to think revenues grew about 10% over the first six months. But this quarter is one of the strongest of the year. Last year the company reported a 16% sequential gain in revenues. This year I expect to see about a 10% gain, which means revenues will come in at 16.0M, and this should leave us with a profit of 53 cents a share.
So the earnings should rise from 46 cents based on 4.70M shares to 53 cents this year based on 5.35M shares. Now the number of shares hasn't really increased much; its just this year the fully diluted earnings will include the warrants, while last year the reported earnings didn't.
Last year the DecQ EPS were reported as 59 cents a share, so unless we see the DecQ earnings this year climb more than 10% sequentially, the fully diluted EPS reported this year will be less than last year's reported EPS. This may be causing some concerns among momentum and growth investors. The top line revenue growth should still be good, and the bottom line earnings should look good. But the EPS reported may not look so good compared with last year's reported EPS.
For GARP or certain types of value investors, the stock looks very good. The trailing twelve month earnings for the SepQ will be $2.07. And if the company increases earnings 25-30% next year the reported EPS, should grow to about $2.40-2.50 over the next twelve months. The only street estimate has $2.25 for the year ending in Mar98 and $2.75 for the year ending in Mar99. This looks a bit rosy to me, but the stock at 20 looks quite cheap, even if they fall short of this estimate.
But the reported EPS in the DecQ probably won't beat last year's reported EPS.
Well, this is my read.
Paul |
