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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (37007)	3/17/2010 3:38:49 PM
From: Spekulatius	of 78528

NWPX - dull business with innovative accounting. i think the one yahoo poster got it right when stating that the depreciation seems too low. NWPX has 180M$ in property and equipment and only 5M$/year in depreciation. Doesn't sound right with me that they assume their machinery last for 36 years (assuming linear depreciation). if that's the deal then we have to subtract 10M$ in depreciation (pick you own number 10M$/year is just a guess) from pretax earnings and you have a more realistic earnings number.Of course it is quite likely that the fudging didn't stop with depreciation. Anyways that is one of the reasons why I look at EBITDA/EV ratios when evaluation companies - those numbers are more difficult to fudge then earnings. NWPX runs at 6.2X EBITDA/EV which is not cheap for a capital intense business. I'll pass until this get's cheaper or the accounting cleared up.

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