analytical bean counter (is that an oxymoron?)vounteering his time to enlighten the group:
Sure, BDLS had a good quarter this year at .49. But the obvious in me (also being referred to as the "master of the obvious" tells me that if they do .49 for 4q's, they're at 1.98 or about 2.5 times annualized this q4's. Obvious conclusion: this stock is a screaming buy. So I did.
But wait a second, some of these earnings were positively affected by tax credits. So I then normalized earnings for taxes, starting with pre tax net income and then applying 35% tax rate. The results were:
inc b/4 inc tx (q4 then fy98) 1670 5657
income taxes -585 -1980
normalized net inc 1086 3677
sh o/s 4531 4926
normalized eps .24 .75
if q4 was annualized (x4) .96
current price 5.00 5.00
calculated pe's 5.2 6.7
So, even with a full load of taxes, company still appears to be under-valued.
Look at the gross margin pcts. It tells you that gp% for q4 was 31.3% and for fy98 it was 28.8%. This means that margins for q4 improved over the entire year. Improving margins are a sign of improved profitability.
Caveat: inventories are down a litte from 13.7 million to 12.6 million. The big question here is how well the inventories can be managed to avoid large obsolesence losses as dumb terminals continue to be phased out. I doubt that management will be in much of a hurry to address any write downs, as I would deem their major goal is showing increased earnings and pump the stock. That's ok with me as I believe the day of this reckoning is probably two more years away.
Other note-worthy comments:
thin client revenue increased 160% year over year. Maybe someone like Mike Stebel can provide us the thin client sales for 1998. Also, it would be good to know how much market share that really represented.
28% Reduction of term debt - I don't see this continuing. If this company is going to grow, it will need more debt to finance a/r and inventories, not less. I wouldn't be surprised if they haven't already begun to address this issue. Their short-term projections have to be telling them that they're going to need a ton.
The stock is too low for a secondary. Hopefully, management and the controlling stockholders are not that dumb. If they think a secondary or a private placement is the solution then again, this lends itself to the scenario of first pumping the stock price. I'm all for that.
Now's the time for good management to show itself.
I already loaded another section of my truck last week, but I'll call in the rest of the fleet if it gets any cheaper at 1/4 point intervals.
WARNING: a bean counter's analysis during middle of tax season. Take it for what it's worth.
Ed Plopa |
