I have been watching this company for a little while, from the sidelines.
Historically, the general consensus has been that it has exceptional management, a special place in its business market, and is in an industry with a long-term positive secular trend.
Perhaps I have missed this in the discussion, but it appears that with a P/E of 14 or less, shares in this firm are presently under-vaulued from a fundamental perspective.
Yes, there was a big blow-out recently with a lot of volume to the down-side including movement below the 200 day moving average. Perhaps there are some institutions that make sell-decisions based on this type of charting. But the 200 day moving average is a backward-looking intention--good for telling where you've been but does not cause future direction. Gross revenue and earnings and Mr. Market's expectations for future revenues/earnings do predict or "cause" direction of share prices. (cf. Buffett and Fisher)
So the question I am pondering here is: Do the flat earnings represent the end of the previous trend? Has Hummingbird lost it's market? Has Hummingbird's management fatally screwed up? Etc.
Or, is this present period a time of transition in which Hummingbird is shifting its products and sales force and corporate structures with the result that it will be enabled to resume its previous course of growth in revenues and earnings? In other words, is the current period one in which management has intentionally redirected earnings into increased investment in the company for greater future growth?
I don't know the answers to these questions and pose them here, hoping those with more knowledge of the company (management, products, market position, etc) will shed some light. (Does a P/E of 14 reflect a bargain or shoddy goods?)
Ciao,
David Todtman |
