You've piqued my interest in this stock (MWY-Midway Games), Don.
Eyeballing the chart, it looks like it has considerable support
around current prices (now 17.5). I am no technician, but I do look for some kind of trading range to set buy points, usually.
I imagine the drop in gross margins concerns some people; it doesn't
look too bad to me. Is this
outside of a historical range?
At a P/E of 15.4 (per yahoo quotes) it doesn't seem too expensive,
but what is the typical range of P/E's for games companies?
Balance sheet shows ~$6/share book, just under $5 if you remove
goodwill. I like a lower P/Book for true dirt cheap value plays,
but you have to be looking at a real freakout in most cases (in the
current market environment) to
get less than 2. Current and debt/equity seem OK. I am a little concerned
by receivables: up 27% over a year ago with revenue only up
16.5%. (They are up 49% over 9 months ago, but I don't know if that
reflects seasonal factors as well.) Also, for the last half of 97,
operating cash flow was negative 12.6 million (there were 38 million
shares in March), versus positive 5.14 million in the last half of
96.
Recent SEC filings don't turn up anything alarming, although I
don't have an expert's nose for danger and there are some obscure
registration statements for offerings to employees, etc....
No 144's or other insider sales turned up on my Edgar search.
"The Capital Group" went over 5% in Feb.; other SEC
13G/D forms seem to relate to some spinoffs from
WMS industries which owned some of Midway, and ownership
changes caused by those. The recent buyback (from GT interactive,
the country's largest games distributor)
of distribution rights to their games in NA and Japan sounds like
a potentially very good thing (and also sounds like it may explain
some of the shifts in receivables and maybe cash flow). I guess
it also increases risk.
Can anybody cast light on any of these things? I haven't done a
long-term spreadsheet analysis with every quarter's numbers, so I'm
just throwing out some casual observations which are not necessarily
big worries. Also, don or Mike, if you want to summarize the
fundamental story again I'm game.
Now, the real reason for owning this sucker. Who wouldn't want
to boast of owning a company that sells such obvious
classics as "San Francisco Rush" and "Cruisin' World". Are these
an unusually interesting brand of "lifestyle game"? Let's see,
there's also "Touchmaster" and "California Speed". Hmmm.....
Whew, there's "Off Road Challenge." I was worried there for awhile
about the, um, orientation of this company. But I guess it's got
something for everyone -g-. Soon to come--- "California Off Road
Cruisin' Challenge II: Where the rubber hits the road,
and the leather hits the dirt" ?
I will ask a contact in the PC games industry his opinion of MWY,
and report back.
Cheers to all,
HB |
