This is the fourth quarter since the acquisition of the acrylic fiber business, so comparisons to previous year won't mean anything until next quarter. Note that their release doesn't break out differences from prior year excluding the Hungarian operation.
Two big points:
1. The 2 million shares were finally placed at $32 - this brings capital for expansion and dilutes ownership. Let's see how they employ this capital.
2. The CFO resigned. Note that I have previously posted that the Hungarian financials have not had an audit yet. Since I believe that a substantial majority of the earnings increase this year is from Hungary, this is a warning sign.
My two cents on this stock - Near term run to $37 or $38 based on earnings hype, followed by a slow slide back to mid $20s followed by the bottom dropping out in Jan/Feb. Alot of uninformed investors are going to look at the year to year earnings increase thinking that it comes from carbon fiber and the shock will come with the next quarter report.
Tulvio, did you call investor relations and ask the questions I suggested? How many pounds of fiber did they sell? Also, you won't see ZOLT break out the <<substantial improvement>> of the acrylic business from the <<continuing growth>> of carbon fiber, so ask what percentage of sales/earnings comes from Hungary?
Also, since the 2 million shares were sold at $32, look for the institutions to hype this stock even more as they look to sucker in individuals.
I just looked at my Zack's report on ZOLT from 4/28/96 and the EPS at that time for FY96 was a consensus $.72 (alot higher than the $.45 they reported). The stock traded on that day at $69 (or $34.50 split adjusted). So I would say that they have greatly underperformed what everyone thought just 6 months ago.
I don't have the shares outstanding after the 2 million were issued, but we need to know how much dilution there has been.
In summary, I see no answers to the variety of questions I have raised on this thread.
Good luck.
flyguy. |
