According to my calculations, and using only the hydroponics project and a PE of 15, I come up with a value of 4 cents per share for this stock. It is my opinion that it is severely undervalued.
You can call them at 913-859-9292 for their last published financials. I've got them, but not sure where they're at right now. I'm sure they're quite old.
I know that getting up to date on the financials and returning to reporting status is high on their list of priorities. The last time I asked them about the financials (a couple of months ago, I think) they were being worked on. Don't know when we can expect the latest batch, though, and what periods they'll cover. I'm sure they're probably considered relatively low priority by their accounting firm. One of the banes of penny-stockhood.
As a rule of thumb, if you use a PE of 15 and go with the high end of their net range (typically 7-10%), each million dollars worth of contract is worth a penny of stock price. It is my understanding that the hydroponics contract will net them toward the high end of the range.
Addendum: Just found the copy of the 10-Q. It's for the period ended September 30, 1996. At that time, they had a net loss of $300k vs a loss of $1.7M for the same period previous year.
When I asked them about financials a while back, I was told that they were working on "the K and the Q's", which makes me think they're working on the 96 K and more than one of the Q's, bringing them into 97.
Going back through old press releases, I see that a bid was submitted in September for a Navajo housing project. I don't know what the status of that one is.
There's also the Fluor-Daniels bid for foundation work for an automotive plant expansion. There was a press release about this one more recently that the one I've got (9/5/97), so don't remember if the figures have changed, but according to the old one, it's between $5M and $12M. I would think winning this one would yank us pretty quickly to 10 cents per share. More importantly, it'd be a *major* feather in our cap and would open the door not only to client who've never heard of us, but to the many old clients who are probably hesitant since the Chapter 11.
The hydroponics contract award is major; pulling it off successfully would make ARET extremely visible in this particular niche, and likely to get more related work. It would be the butter on the bread.
If the Fluor-Daniels gig happens, though, it'll be the pre-cursor to substantial portions of meat and potatos hitting the plate.
I'm not in it for the 10 cents that would be likely if they win the Fluor-Daniels gig. I'm in it for the $1 (very long-term) they'll eventually be worth with the future contracts it would open the door to. |
