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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Keith J who wrote (41541)2/28/2011 9:33:41 PM
From: robuck  Read Replies (1) | Respond to of 78702
 
I don't see a compelling margin of safety in this company.

This company is trading at 2.5x tangible book with negative free cash flow and declining revenues. The multiple is low, but so is the profit margin, and the quality of earnings are poor. The management may be great, but the economics of the business are dependent on factors outside of their control. Current valuation doesn't justify an investment IMO. May be attractive for others, but not for me.



To: Keith J who wrote (41541)3/1/2011 2:23:30 AM
From: Jurgis Bekepuris  Respond to of 78702
 
revenue on the R2 contract that is being phased out. The decline in revenue there doesn't hit profits too much.

I disagree. Even though R2 has low margins as you indicate, that does not mean that this contract is meaningless. It was still earning money and now whatever extensions of it VSEC has secured will earn less. And that's not positive.


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