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Technology Stocks : Electronics Boutique (ELBO)
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To: Night Writer who wrote (284)3/21/1999 12:01:00 AM
From: Mad2  Read Replies (2) of 779
 
I think the term "bankruptcy predictor" is a bit negative. However as many look at earnings and revenue, the Altman calculation gives a weighting to balance sheet items. I like what Razor is doing with the altman calculation in that it provides a quanitative tool for measuring the financial strength of a company.
I have to admit I'm quite suprised the market hasn't reacted more favorably to ELBO's performance. I would suggest it's a combination of;
Relatively limited track record
Flat (actually declining) net income on a per share basis. This is due to to favorable (zero) tax rate for 97 earnings.
Stigma associated to software reseller (ie brick and morter), although as a large segment of their market it pre-teens and teens who hang at the mall and don't use credit cards I think they have the right approach with favorable demographics (teen boom is just starting). Interestingly EGGS commands a 40% higher market value on 80% lower sales of more commodity oriented products and miserable earnings. To my way of thinking, ELBO's product is more niche orientated and they seem to have a verticle approach to their market (hardware, software, components with the e-commerce angle). I'm quite impressed with their web site which serves a variety of functions (HR, Information on product and store locations as well as allowing purchaces).
Anyway I don't see any negatives on the horizon for ELBO. Am I missing something here?
Mad2
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