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I've been following this stock since last December.

I was visiting OKC and an article in a newspaper quoted their CEO as saying they expected to double 1997 because of their acquistions. I also confirmed this later on Yahoo in a press release. At the time the stock had a reasonable PE of about 20 and was selling for about $5. Read my earlier post asking if anybody else was in this stock.

The earnings report for last quarter shows them to be on track to do what was stated but the first quarter was miserable and didn't come close to the prediction of doubling sales or earnings. I am looking for an upside suprise this quarter of about $ 0.25 to $0.30 per share if they are really serious about meeting the annual estimate. If this happens, I think this stock is definately a winner and will be over $ 10 by the end of the third quarter. If they wimp out and don't come in with earnings above expectations, I am going to say so long and take my gains. The reason, I used to live in OKC in the early 80's and knew quite a few people that worked for CMI. Swisher, their CEO, always seemed to have this incrediable ability to shoot the company in the foot when it mattered most and IMHO this quarter matters. We will see if he learned anything during the bust years.

There has been some talk that Asia is hurting sales, but can't get any source other than their 2nd quarter report to confirm this, but they were specific and also stated the funding bill probably would add enough sales domestically to cancel out the loss of revenue from Asia. These statements are my opinions of the Q and A session in the quarterly report. I certainly was not impressed with it as it was a lttle too "hoky" as they tried to make Swisher everbody's all-american next door neighbor, not the CEO of a multimillion dollar company. Too many pages, not enough facts, too many irrelevant questions to make the company look good, and way too much spin by the company doctors.

But one fact did stick out, all their acquistions should be online and have full contributions for the 3rd quarter. We will see if they made good decisions by adding the new lines.

Now for what you asked for, my analysis:

With their closing price today at $ 7.50, I have the company overvalved right now with a Real PE of 0.09 and a Total Return of 3.85%

However, if they can increase their earnings, by at least matching last quarters numbers, resullting in annual earnings of at least $ 0.57 per share, the numbers change to having the stock undervalued if it stayed at $7.50. The estimated Total Return increases to approximately 19.5%. Using their historical PE range of 16-20, this should allow for some upward movement to somewhere between
$ 9 and $ 10. Sorry, but I don't find enough infomration to go any farther out.

I'm in until the next earnings report which should come out somewhere around October 20, and then I will decide whether I stay or not.

Personally, I'd be uncomfortable a new investment at the current price if I was just buying in and probably wouldn't buy at the current price as the Total Return number has me spooked some. Also my past knowledge of the company, (now over 15 years dated), and the not so glitzy but wanna be 2nd quarter report is not adding to my comfort zone. But if it dips back into near the $ 6 range between now and October, I probably will pick up some more. I orignially bought at 5.5, added the bulk of my holdings at 4.75 about a month later, and then added some more at 6.5. My overall average is slightly above $ 5.25. As you can see, I've got some room to play and I also have the luxury of waitng to see what happens without spending or losing too much of the desired comfort level.

My advice to you, it's your money - do your homework, get all the information you can, do you own analysis, then you gotta decide.

You may or may not pay any credience to way I try to analysis stocks. Sorry for such a long post, but you did ask.
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