Gentner's 3Q earnings report and conference call
By Jon DeBry,
Last Update: 11:00 AM MT Apr 15, 1999
debry.com
Earnings report
Continuing their string of positive earnings reports, Gentner reported large sales and earnings gains for the third quarter 1999. Earnings before taxes were up 168%, revenues were up 38%. The strong growth was attributed to strength in both of their core divisions - Remote Facilities Management, and Conferencing Products.
So far this year, Gentner has earned 20 cents a share. Their estimate for the entire year is 25 to 28 cents, so it appears they will be able to achieve that.
Their gross margin climbed to a record 58%. They did warn, however, not to expect it to stay this high - 55 to 56% is a more realistic number, especially considering they will be OEM'ing more product in the coming quarters.
Inventory levels increased more than might be expected, but that was attributed to the ramp up for the video conferencing product release and a large shipment of ALS products at the end of the quarter.
Conference Call
Gentner teased us investors a little bit during the conference call with the statement that they were looking into Internet products and/or alliances. It's obvious that they need to keep up with what is happening on the Internet, and they seem aware of that. They already have relationships with broadcast.com and MSHOW.
They're also aware that a $5 stock price will help tremendously in getting exposure to a wider range of investors - the $5 price is all they need for a NASDAQ listing.
Although specific sales numbers were not discussed, it sounded as if Gentner had not yet shipped a meaningful number of APV200s, their new video conferencing product introduced in February. This was attributed to the large lead time for this type of product. They have been hiring and training new sales people, and I would expect APV sales to pick up nicely in the coming quarters.
Valuation
Over the last week, the Russell 2000 index of small-cap stocks has outperformed the other indices. This is an excellent sign for Gentner, as a revival in small-caps would surely send some money Gentner's way. Of course, small-caps have underperformed for years, so we need a little more time before the turn in small-caps can be officially proclaimed.
More importantly, though, other video-conferencing stocks such as Polycom and VTEL have recovered in the past several weeks, after rumors of industry weakness. Polycom reports the last week of April, and that should tell us a lot about the industry.
I'm sure I sound like a broken record, but at a forward P/E of 16, you're getting a well-run company with quality products that is growing at 30+% in a high-growth industry. If you want to own stocks, this is the type of stock to own. We still rate it as a Strong Buy, and our best idea <JD>. |
