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 : Bankruptcy Predictor Model -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (261)	3/31/1999 1:13:00 AM
From: Razorbak	Respond to of 477

Management Evaluation <<As a turnaround consultant, access to management and cooperation would have to be part of the upfront contract...or it would be a no go.>> We don't always get that luxury, but sometimes it's very straightforward. One company had just lost both the CEO and CFO at the same time - they both got sent to jail for fraud - and the board of directors, populated with mostly financial types, was trying to pick up the pieces. <<For analysis of competitive environment I rely on Porter's ideas...awesome...>> We're definitely on the same page there. Porter's a genius IMHO, and I use his work extensively in just about every industry in which we operate. Razor

To: Bob Rudd who wrote (261)	3/31/1999 4:25:00 PM
From: Q.	Read Replies (1) \| Respond to of 477

For anyone interested in value stocks, I computed Z = 4.2 for JLMI, a small stock that I own. The co. has a plant that produces acetone, which is used in making plastics. The stock has fallen more than 50% in the last year, and now has a PSR of 0.13, p/e of 5, and a p/b of 0.85. They aren't heavily leveraged, with debt/equity of only 0.3. ROE and ROA are well above the chemical industry's average. yahoo.marketguide.com Those ratios are why I bought the stock. They own one plant, which runs at full capacity, all the time. Pretty simple. The risk is that they produce a single commodity product, and the market price of acetone has declined in the last year, depressing margins. I suppose that accounts for the stock price drop. The eps will decline, so that p/e of 5 won't last very long. I wanted to know much risk I face, since the co. is looking at declining margins. I figured that since this an uncomplicated type of manufacturing co., maybe Altman's Z can be relied on. I computed Z = 4.2 for 1998, down from 5.4 the year before.