Pancho,
I just took a very brief look at PCTY's 1996 10-K, and their 1997
3rd quarter 10-Q. Take a look at this:
3rd quarter 4th quarter 4th quarter
sales sales earnings
1995 3,051,000 8,625,000 1,177,000
1996 7,507,000 20,736,000 3,077,000
1997 25,762,000 ? ?
If this company has the same 4th quarter percentage increase over the
3rd quarter this year, that they had last year, they'll end up with
4th quarter sales of 70 million, and earnings of 10.5 million, which
would be 1.28/share. I may be missing something -- as I said, I only
looked at it for a few minutes, but it seems that 0.81/share is
certainly feasible.
If they earn close to $1.00/share for the year, and are growing
earnings and sales at that rate, they may deserve a higher P/E than
most retail stores, and an even higher stock price.
I wouldn't go long on the company, because I don't like seasonal
businesses -- especially ones that only have one good quarter a year.
But I also think there must be better shorts out there, such as YHOO,
AOL, BVF, CDRD.
Good luck,
- Charles |
