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Gold/Mining/Energy : American Eco (ECGOF, ECX on Toronto exchange) -- Ignore unavailable to you. Want to Upgrade?

To: MARK BARGER who wrote (2158)	3/13/1998 5:11:00 PM
From: Nero	Respond to of 2841

ECGOF lesson #5,692: I think I have finally learned that an undervalued stock with a low PE can get hit just as hard as a high flyer. ECGOF missed 4th quarter whisper number by 33% -- almost the same percentage as we have dropped from 12. A low PE even with good growth offers no protection from earnings selloffs. Would AOL or KO fall any worse than ECGOF? No. nero

To: MARK BARGER who wrote (2158)	3/13/1998 7:28:00 PM
From: Dan Kelly	Read Replies (3) \| Respond to of 2841

The advisor on the DBCO acquisition is Nesbitt Burns, the investment banking operation of Bank of Montreal. Look for them to pick-up coverage. I spoke to Dave Norris at ECO and he related the following: mgmt thought they had the 1.20 in the days leading up to the announcement, but fell short due to a disagreement with the auditors over income recognition on certain contracts, the " mobilization" issue - i.e., Coopers held that ECO had not performed enough work on the contract to begin income recognition. Therefore this item appears to be a timing difference and will hit this year. The second piece of the miss was NOL accounting issues. I do not have the breakout between the two. With regard to earnings guidance for this year, Dave is working with analysts who currently follow ECO and new firms on numbers which should be out in a couple of weeks. Firms mentioned include Nesbitt Burns, Legg Mason (I-Bank to DBCO), Everen Securities. Deutsche Morgan Grenfell and Prudential Securities. Prudential is likely, with Nesbitt, to lead any high yield offering. A decision on that is expected within 30 days. Groome Capital, which had projected earnings in the $1.08 area, issued a short analyst report which projects earnings of $1.21 for this year and $1.97 for next which gives the full benefit of the DBCO acquisition and also assumes a $150 MM high yield offering. Strong Buy with a target price of $32 and change Canadian.