ORBKF vs. PHTN
Here's my analysis:
Category ORBKF PHTN
Price 35 3
Earnings 3.00 tr loss
PE 13 NA (loss)
Earnings history excellent terrible
Revenue growth good so so
Market cap $400MM $20MM
Diversity poor terrible
Exposure to SE Asia poor poor
Vector Vest value $70 $2.80
VV safety index .98 fair .74 poor
VV "VST" (overall rec.) 1.18 hold .81 sell
Shareholder equity +50% declining
As you can see, my reasons are entirely investment oriented, not
technical, as I think PHTN has terrific product in a growth area. But
Orbotech knows how to make money and may well have the
resources to put PHTN out of business altogether as it enters the FPD
inspection area. PHTN has negative cash flow and may not even
survive the SE Asia problem, while ORBK, although very exposed to
SE Asia problems, has tons of cash and is still projected to show
healthy profits for 1998, a little below flat over its huge earnings in
1997.
The big difference to me is that Orbotech knows how to make money.
This isn't the end of the world for me, and I included the ratings from
VectorVest with the stipulation that I have had a lot of issues that VV
despises, but it is a useful tool. Anyway, I did extremely well with
ASYT when it had great sales and product, but was losing money, and
indeed, the company got its act together. But still, all things equal,
PHTN is a very big gamble while Orbotech has good growth potential
combined with much better safety. I have to agree with VV and think
that it is undervalued by 50%, while PHTN is a total wild card.
I have held a couple of Israeli companies and, while it is somewhat
unsettling because of potential for fraud in a company outside the US,
I've generally had good luck, including one HUGE winner in firewall
software.
As a last word, PHTN is selling at PB of about 1, while ORBK must be
like 5 or higher. This can mean two things though. I generally look at
PB for undervalued stocks, but a low PB is also frequently indicative
of a company in trouble. Service Merchandise was selling at a PB of
0.8 recently, because it's losing money. |
