James:
RECY
Looks like too many people were looking for a home run. The numbers, IMO, were very good, why such a hard line stance on EPS? The numbers were very compelling in terms of monies coming in. It is very expensive to assimilate all of these companies, it makes little sense for the market to expect strong EPS if the earnings are being gobbled up to grow the company. It is actually a laugh, James. The idea all along with RECY is to grow the revenue run to a billion. Dosen't it make sense the the company needs to sacrifice a bit of earnings to achieve that goal? Lets see exactly what it cost RECY to do business this qtr:
Net sales..........$69,669 100.0% ... $12,741 100.0%
Operating expenses..59,277 85.1% ... 10,361 81.3%
Gross profit...........10,392 14.9% ... 2,380 18.7%
Selling,admin expen...4,456 6.4% ... 1,450 11.4%
Operating income.......5,936 8.5% ... 930 7.3%
Other (income) expense:
Interest expense.........4,864 7.0% ... 430 3.4%
Miscellaneous.............60 0.1% ... (26) (0.2%)
Total other expense...4,924 7.1% ... 404 3.2%
Earnings and charges.1,012 1.5% ... 526 4.1%
It's the old adage, would you rather have 10% of a million dollar co or 1% of a billion dollar co? 85% of RECY's revenues went towards the pursuit of aquisitions, interest alone gobbled up 7% of revenues. It is expensive to go on a buying spree, RECY investors need to understand this because your not going to see big EPS surprises for some time now. The companies intent is to raise the revenue run rate to a billion dollars. They have, more or less, been right on track with that plan and have satisfied my expectations, including this earnings report. It is my feeling that the less informed are responsible for the sell off. With some more aquisition news the price will be right back.
IsaacF1 |
