| An SI Board Since November 1996 |
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RFIL |
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This company has really gotten its act together this year. Third quarter earnings are out in the next few days, and I think they will bounce the stock price up nicely. They have two divisions. The Neulink side was almost nothing last year, but introduced a wireless digital data modem for industrial use that has been extremely successful. 9600 baud doesn't seem all that exciting, but it is selling like hotcakes. Their backlog this year is around thirty times the total sales for the division last year!
The other (connectors) division has restructured and has solid growth and has added many distributors. It has an exclusive contract with one of the two companies with the Emergency Alert System that is replacing the Emergency Broadcast System. RFIL estimates that it could get $5 million in sales in the next year from this. This vs total sales of around $3 million last year. The last four quarterly EPS have been (.01), .03, .06, .10. Not a bad pattern! If they just hold at the most recent quarter's level, this stock trades at a 13 PE. I think they are just getting rolling and the quarterly numbers this week will be even higher. With this kind of growth, a higher PE is certainly justified.
There are about 3 million shares, with management holding a large chunk. There is some dilution as they have an R & D contract with an engineering company paid in stock. The dilution is relatively minor, especially when you consider the recipients were the source of that modem. Stock is thinly traded. Company is in the process of getting on Nasdaq, and has the assets, share price etc to qualify. Just a matter of time. They aren't on EDGAR, but they'll send you the financial statements which are very solid looking.
Below is the press release from last quarter's earnings...
RF Industries Ltd. (OTC:RFIL) Wednesday announced record results for the third quarter ended July 31, 1996, as net income reached a record $294,000, or 10 cents per share, compared with a loss of $25,000, or 1 cent per share, in the same quarter last year. Sales also set a record, increasing 107 percent to $1,650,000 compared to $797,000 last year. "RFI's record third-quarter results are due to a 58 percent increase in RF Connector sales and an eightfold gain in sales of Neulink's wireless digital data modems. Gross margins improved to 57 percent of sales, compared to 47 percent of sales in last year's third quarter. With backlog at $3,100,000, we look forward to reporting a strong fourth quarter," said Howard Hill, president of RF Industries.
For the nine months ended July 31, 1996, net income quintupled to$539,000, or 18 cents per share, compared to $100,000, or 3 cents per share, for the same period last year. Sales increased 57 percent to a record $3,830,000, compared with sales of $2,442,000 last year.
Hill noted that RFI's total assets of $4,163,000 enable the company to apply for relisting on the NASDAQ exchange and added that at July 31, 1996, RFI had cash and cash equivalents of $935,000, working capital of $3,217,000, a current ratio of 5 to 1, no long-term debt and stockholders' equity of $3,327,000, or $1.11 per share. RFI's Connectors division manufactures, distributes and designs radio frequency (RF) coaxial connectors used in personal communication systems (PCS), radio communications, test instruments, PC LANs and antenna devices. The Neulink division designs and manufactures wireless digital data transmission products used for industrial monitoring, linking wide area networks, GPS tracking and locations systems.
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