Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Ron McKinnon who wrote (21917)	1/14/2000 1:52:00 PM
From: DanZ	Respond to of 53068

KSWS. I made an attempt to forecast K-Swiss's earnings for the period January through June 2000 and year 2000. My forecast is based on the January 12 press release and an average net margin calculated over the last five quarters. Input is welcome. Jan - Jun 2000 future orders: $105.7 million ---Comprised of: ---Qtr 1: $61.7 million (-26% Y to Y) ---Qtr 2: $44.0 million (-22% Y to Y) Jan - Jun 1999 future orders: $140.5 million Jan - Jun 1999 actual orders: $155.8 million Multiplier = 155.8/140.5 = 1.1 Order Distribution (domestic/international): ------------------1999-----2000----Change Domestic--------$131.5----$95.3---- -27.5% International-----$9.0----$10.4---- +15.6% Net profit margin estimate: Sep 98: 7.93% Dec 98: 9.27% Mar 99: 15.0% Jun 99: 10.0% Sep 99: 11.7% Average: 10.7% Net income estimate: Jan - Jun 2000 Orders: $105.7 million Muliplier: 1.1 Revenue estimate: $116.3 million Net income = 116.3 mil x 0.107 = $12.44 mil Shares outstanding as of Sep 99 = 11.164 mil Fully diluted as of Sep 99 = 11.685 mil 4th Q share buy back = 360k Estimated shares outstanding Dec 99 = 10.8 mil Estimated fully diluted shares = 11.325 mil EPS estimate = $12.44 mil / 10.8 mil = $1.15 EPS fully diluted = 12.44 / 11.3 = $1.10 This estimate is only for the first six months of 2000. Assuming an EPS estimate of about $1.00 for the second half of 2000, the company would have earnings per share of $2.15 in 2000. The stock is trading at 13 1/2. The forward PE is 6x. The average for the shoe industry is 24x. This is not justified. The company would have to lose money in the second half of the year to even come close to justifying the current stock price. K-Swiss hasn't lost money in the second half of the year in the last 4 years. In 1996 they lost 6 cents per share in the last half, but that was on only $20 million in revenue. The likelihood that K-Swiss will will lose money in the second half of this year is nil and management has already told us to expect about $1.15 per share in earnings in the first six months based on current orders. Even if their total earnings in 2000 were $1.15 per share the stock should be higher. This stock is severely undervalued IMO and I believe that it is a screaming buy. JMO and I bought more today.