To: Mr. Pink who wrote (1587 ) 2/17/1998 10:34:00 AM From: Qualopec Respond to of 7054
Latest Individual Investor Analysis: Earnings exceed expectations; despite short sellings, long-term investors should benefit; Buyÿ(2/13) On February 5, 1998, Actrade (ACRT) announced results for the second quarter, ended December 1997, with revenues exceeding our expectations. Revenues increased more than 160% to $23.1 million due to increased demand for the TAD program. We'd estimated revenues of a little more than $22 million. ACRT's Net income increased by more than 190%, to $1 million, and earnings rose 117%, to $0.13 per share. For the first six months, revenues rose to $43.1 million, compared to $16.4 million last year. The company's TAD program grew dramatically, by 239%, to $24.8 million. More than 57% of total revenues were derived from ACRT's TAD program. The company's International Trading Division accounted for about 33% of its total revenues. Gross margins were 9%, down from more than 10% in the last year's quarter due to the TAD division's lower markup than that associated with the company's international trade operations. But, net operating margins increased to about 4.8%, up from 4.2%. For the first six months of 1998, net operating margins reached a new high of 5.2%. The company's cash position was down to $2.5 million, from $7.3 million in the previous quarter, due mainly to the TAD's purchases. The current ratio is a very healthy 9.7 to 1. Accounts receivable increased dramatically, more than 150%, to $13.3 million, but a little less than revenues, which increased 160% over the last year. Despite ACRT's great quarter results, the stock price is not moving up. Shares were down more than 45% in the last few months and are trading anemically at $15.56. There is a lot of short selling activity due to recent rumors among investors regarding the company's overstatements of earnings and its bankruptcy case. According to Amos Aharoni, president and CEO of Actrade, theses rumors are just plain false and there is no reason to be concerned about his prior bankruptcy in Israel. According to Taglich Brothers analyst Karl Reeves, ACRT's revenues will increase to at least $100 million in 1998 and $200 million in 1999, up from $43.5 million in 1997. Earnings will be between $0.50-$0.56 per share in 1998 and between $0.82-$0.90 per share in 1999. ACRT's management considers these numbers conservative. Mr. Reeves' 12-18 months price target is about $40-$50 due to the company's rapid expansion in the $80 billion market. (Posted 02/12/98 with ACRT trading at $15.56 per share)