Boy, it sure is nice to see someone other than me post on this stock.
Welcome to the thread, Mark. You have stumbled on a diamond in the rough. I have been accumulating Air Methods stock over the past three years and follow the stock and the company very closely.
Yahoo did not make a mistake on the earnings estimate. The analyst from Brous and company is projecting earnings of 57 cents and she does not include some very exciting upside potential.
Then why does the stock chart look weak and the price sit at 5-6 times that earnings figure? That is a long story and I will try to give you the condensed version.
In 1994 previous management hyped the stock up to $14 with some very inflated estimates and expectations. The BOD brought in some new management, lead by the CEO, George Belsey. George is an extremely competent quiet fellow who has the company pointed in the right direction. The CFO, Aaron Todd, is doing an excellent job managing expenses and doing what CFO's are supposed to do.
OK? So why the multiple already? The management is very edgy about the previous attempts to hype the stock and are very very very.... conservative in what they say to the investment community. In the last quarter conference call, Mr. Todd repeated his policy of not commenting at all about earnings or sales prospects. IMHO this policy has cost the shareholders very significantly in the market value of their investment and works against the business plan for the company. And I have told the CEO that opinion directly. Air Methods does plan to hire an IR firm in the next few months.
The analyst from Brous had predicted 10 cents for the 3rd quarter and the number came it 8 cents with a penny of one-time expenses. So the first results after the buy report from Brous were very good, a record for the company, but unfortunately they were short 20-30% of the estimated earnings number. Performance like that does not excite the Street, so the stock has received very little attention.
This stock is undiscovered and remains a superb value for the patient investor. Mark, if you are buying any reasonable quantity of stock, you will have difficulty accumulating it if you wait for the uptrend to develop. If you are a thousand share investor, then your strategy makes some sense. But it has taken me a long time to buy my much larger stake.
I do not know exactly what will spark a large move to the upside. You should understand that this past summer the company acquired Mercy Air in California, and Mercy added nearly 5 cents to the q3 number with only 60 days of inclusion. We can not extrapolate that number to the whole year, but it clearly was a major accomplishment by George Belsey to pull off such a purchase.
The company has a number of other initiatives in the works, that may or may not come to fruition. Any one could set the price moving dramatically higher. I expect that next February the company will report 10 cents or higher for the fourth quarter. If they meet or exceed estimates, that announcement could cause a large move in the stock price.
I am not a broker, but would be happy to correspond by email or talk on the telephone with anyone interested in Air Methods. I am in this stock for the target price that I have previously posted-double digits. I will not sell for less than that. I thought we might reach that price in 1997, but several corporate developments have been slower than expected to come to pass, so I believe I will be selling some stock in 1998. My email address is ECL1@aol.com.
Sorry for the length of this post. The price of 3 3/8 is so annoying that writing this note is good therapy for me.
Peace to all,
Elliot
ps Mark, what brought Air Methods to your attention? One of the problems with the stock price is that very few potential buyers seem to amble by. I am curious what caught your attention. |
