Neil, Nice piece. I would prefer to see more numbers as I am a numbers guy, but I am glad you stand so firmly behind Presstek. I agree with many of your points. Presstek does have some good products and they may turn those products into revenue in the future. But both you and I know, potential only carries you so far. You have to start performing at some point and Presstek has started to perform. They have shown good growth in the past and that is why the stock went from 4 to 54 in a couple years.
BUT it appears they are about to hit a stumbling block, notice I didn't say roadblock. IMO they will get pummeled for it. (IMO the pummeling, albeit a slow pummeling, has already begun. It started when the Q2 numbers were released.) That is why the price has gone from 54 to 28 in a couple of months and with a current PE of 71 and think it has a long way to go.
I don't think revenues will always be decreasing, but I do think they will decrease for a couple quarters. And Wallstreet pounds companies when that happens. Do I think its justified or fair? No. But I do accept the fact that it happens.
Don't take it personally and don't think the street hates Presstek or that I hate Presstek. It is fact of life when it comes to investing. There are countless examples. When a company grows at certain pace it is afforded a certain multiple, when the growth slows that multiple is lowered. When the growth stops they get pummeled and EFII happens to be getting it today. If the growth increases again, the multiple will be increased.
BTW, the similarities between the EFII and PRST are remarkable. Both have shown consistent growth, both rely heavily on one or a few key customers, both are in the printing industry, both have been named to several 'Top xx Growth Company' lists, both are constantly developing new products. It just happens to be EFII that stumbled first.
Maybe a year from now when the growth picks back up, the PE can be raised and stockholders will do well buying in at that time. I just find it very hard to invest NEW MONEY into a company that is down 25% on the year, down 45% from its high, still has a PE of 71, a market cap almost 10x TTM sales, and has announced..... (I'm not even going to type it as it has been said so many times)
If I were in Nanny's shoes with a cost basis of $4 a share, I would probably hold through the volatility, too. She is playing with the markets money, not hers. If all her shares were bought at 54, I think she would be singing a different tune. Plus, She has no need for the money right now and can afford to wait three years for the price to rebound.
I just can not see buying a position in PRST at this point, No way!
Neil and Nanny, It looks like we will just need to agree to disagree on this point and wait for the results to come. I say there is no way for Presstek to make up the lost revenue by Q1 98 and both of you do.
Brent |
