Gary-
I value your analysis, but I feel that your projections may be too low forQ1 and for the year, but if your projections come true, it's still a pretty good return. Here's my take on 1998.
I think that we'll see Q1 with EPS in the .50/share range. My reasoning is that in the CC, we were running at full bore, and the quarter was half over, the customer HAS to re-fill empty shelves. As for the Chinese New Year, didn't they have one last year also? Why would this be a factor? It may fall in this quarter or next quarter, but over the next 2 combined quarters, it should still be the same as last year.
Q2 should be another blowout-why?--New Products. NASCAR will be a huge hit and I love the way the company has increased their distribution in fishing games by adding games that are slightly different but the same winning concept. Two things happen here---less out of stocks because you have more shelf space and more initial sales due to first orders. Deep Sea should see a great amount of sales based on last year. Heck, it wasnt in the stores for but a short while and it moved to #12 of all hand held games sold.(Do you think the stores will give it more space?) I think so. I look at EPS in the .50/share area.
In Q3,the manufacturing space increase should give us another blowout quarter. Hopefully, NASCAR will be getting re-orders and we'll start to see early X-mas buildup. Based on last year's sell through, we should see more shelf space. Increased production=increased economy of scale and more to the bottom line. I also think we'll see another major license anounced in January, which will help for this quarter. I think .75/share is not out of line.
100% increased production comes into play for the fourth quarter. X-mas sales based on last year sell through and new items, should give us another blowout--$1.25 conservatively.
Add this up and you have $3/share for the year.
Now for the issue of trailing PE. Can the Wall Street gurus keep ignoring this stock? I think we're going to get some analyists following soon, which should help to give it a higher trailing PE. Can a stock with 100% increase in income trade for a trailig PE of 10? I don't think so. If I just discovered this stock and it just had another great year and great products, I might be tempted to pay 25 times earnings(still only about industry average).
You can add up the numbers yourself, because I don't want to be looked at as a hypster, I'm just giving you a very plausable future. And what about the momentum players? We won't even think about them for now. I may be way overestimating, maybe we will only see a trailing PE of 10 and only get a double from here, but maybe, just maybe.......I'll be right. Anyone else's opinion is greatly accepted.
Just some food for thought-
Happy New year-----I've got a feeling it will be.
Kevin
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