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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Axel Gunderson who wrote (691)	8/28/1998 5:09:00 PM
From: Boyd Hinds	Read Replies (1) \| Respond to of 1722

Axel, the short summary is that SNA really bungled the roll out of a new computer system. Employees did not take well to the new system, and as the company has explained in the recent 10Qs, customer service suffered and sales in their tool segment decreased. (During a very busy building cycle in the housing industry!!) Margins have dropped from the year ago period, and so the stock has sold off pretty severely. As I said, the competitor I follow, PFINA, is a supplier to Sears for their Craftsman line. They import their tools from overseas, and should see their margins rise as the yen falls. In a period of declining interest rates and increasing real wages, tool makers like PFINA should benefit from what I feel will continue to be a strong housing and homebuilding market. If you compare the two companies, PFINA has a lower PE, P/S, and P/B and is a more concentrated play on the continuing real estate construction boom. However, a real problem for PFINA is their lack of liquidity. Outstanding shares are only 3.77 million, and they only trade about 5 - 10K shares/day. In this market environment, that's a real liability!! Patience is key. I think SNA and PFINA and other machine tool makers should hold up relatively well, but I fear that SNA will have future sales growth problems until they get their information systems under control.