Hi Mark:
I expect earnings to be released for the quarter ending
September 30 (Q2) sometime in the last week of October.
I am basing this on the previous earnings release, which
happened 22 days after the company closed the books on Q1
on June 30, 1998.
As far as earnings go, this will be a difficult comparison
quarter for HOLT. Looking at the 1997 IPO registration, I found a
breakdown for the 1997-8 FY Q2. I offer my estimates for 1998-9 Q2
based on the trends I see:
1997-8 1998-9 ESTIMATE
Sales: 7,063 8,122 +15%
Gross: 3,356 3,655 (45% of sales)
OperInc: 1,855 1,543 (19% of sales)
EBIT: 1,855 1,743
Net: 1,113 (40% Tax) 1,046 (40% Tax Rate)
Shares: 4,020 5,770
EPS: .28 .18
HOLT had a tremendous Q2 in FY 1997-8. I don't expect them to
duplicate the strong level of Operating Income, which was over 26% of
sales in that quarter. Typically, it has been around 19-20% of sales
recently. Compounding this is the increased amount of outstanding
shares, which were issued during the IPO last year. This will
continue to dilute net EPS until Q4 of this fiscal year (March 1999).
Investors will not make a quick buck on HOLT based on strong EPS
growth. The reasons I think this is an interesting speculative play
is the strong balance sheet and its high level of cash and investment
securities.
I think that sales and OPERATING earnings can be grown at about 10-15%
annually. To try to adjust for the current dilution, I offer the
following math. Current TTM PE: 4.72 (Based on stock price of 3 7/8)
The outstanding shares have been diluted by 44%, so lets adjust the PE
accordingly: 4.72 x 1.44 = 6.8.
I think the PE should at least be 12, or 76% higher from where it is
now (after my adjustments). We won't get there overnight, but I plan
to hold this company for about 2 years to realize this gain.
(Assuming the fundamentals don't change) Cigar sellers are at the
bottom of a trough. HOLT is extremely oversold and would be an
interesting takeover candidate IMHO.
-Boyd |
