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Author: stillwater9999 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 20334  
Subject: Wayside - worth another look Date: 2/27/2012 2:19 PM
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The strangely named Wayside Technologies posted strong earnings earlier this month.

http://finance.yahoo.com/news/Wayside-Technology-Group-Inc-i.........

My prior take on the company:

http://seekingalpha.com/article/251297-wayside-technology-ea.........

Pays a 5% dividend. Good insider ownership level. Lots to like here, added today under 13.

sw
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Author: TebowMartian Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13302 of 20334
Subject: Re: Wayside - worth another look Date: 2/28/2012 9:35 AM
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I'd ask you a question or two about this company but every other time I never got a response (sigh)...if it matters, this was also one of those stocks mentioned by the value guys podcast.

fwiw, if you folks are interested in stock picking at all I can't recommend that highly enough. Despite the drinking shtick the underlying discussion, choices, and various references are both highly sophisticated and very detailed if you follow things up, and already I've learned a lot that I didn't know. What is neat is to go thru an issue BEFORE you listen to the podcast and see if your choices match up with theirs. For fans of Value Line in a particular, it is an absolute must listen-to.

Not sure anybody gives a rip, but I learned something borderline startling from doing that. I learned that first, when I looking at VL for a quick review (say 20 minutes to look at 150 names), I key on ROE, cash on the BS, and profitability. This is perfectly fine, but it misses a couple important things - one, if a company has a lot of debt and is paying it down, cash on the BS might not be there, but FCF sure is. Thus, keying on cash levels is not inclusive enough. Two, it makes a lot of sense to look at cash as a percentage of market cap (you have to do a small calculation to do this - on the small cap pages, they don't list the caps) and then look at sales growth. In a company that is not profitable it might simply be a matter of scale (might not too), and you have to look beyond the simple things. The pattern that is probably most important is to look for companies that have been profitable in the past, hit hard times, and are working their way up. With a high cash amount as a percentage of cap, you have a turnaround that will give you some time for good things to happen, and as canuck's LCAV idea shows, when good things happen they happen right away.

I've started a new checklist based on these factoids.

Anyway, just some thoughts...

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Author: stillwater9999 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13304 of 20334
Subject: Re: Wayside - worth another look Date: 2/28/2012 9:49 AM
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No long term debt for WSTG. Over $3/share in cash.

sw

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Author: NajdorfSicilian Big funky green star, 20000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13310 of 20334
Subject: Re: Wayside - worth another look Date: 2/28/2012 10:42 AM
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Two, it makes a lot of sense to look at cash as a percentage of market cap (you have to do a small calculation to do this - on the small cap pages, they don't list the caps) and then look at sales growth.

This is a terrific point.

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Author: stillwater9999 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13311 of 20334
Subject: Re: Wayside - worth another look Date: 2/28/2012 10:56 AM
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Cash and marketable securities/market cap is about 25% for WSTG.

sw

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Author: itconsultant Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13396 of 20334
Subject: Re: Wayside - worth another look Date: 3/5/2012 12:41 AM
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Thanks for mentioning this name. I cannot remember Value Guys mentioned it. What podcast was it do you know.?

Anyways, I only took a brief look at the numbers and they appear quite nice. However, I see some risks with customer concentration and very small compared to competitors and pricing pressure.

WSTG - WAYSIDE TECHNOLOGY GROUP. (IT RESELLER / Distributor.)

Wayside Technology Group, Inc. is an information technology (“IT”) channel company. We resell software and hardware developed by others and provide technical services directly to customers in the United States and Canada.

sales of hardware and peripherals represented only 4%


The Company had three customers that accounted for more than 10% of total sales for 2011.

For the year ended December 31, 2011, CDW Corporation, Insight and Software House International accounted for 14.0%, 11.0% and 10.5%, respectively,


Our top five customers accounted for 42%, 44%, and 36% of consolidated net sales in 2011, 2010 and 2009, respectively.

q4 is big for them. 1/3 of profit. 43 cents.q1 is weakest.

Shares : 4.7
Price 13.5
Market cap 64m

cash 9.2 + 5.3 = $14.5m
Cash per share = $3.1
EV = $50m

WC = 65 - 46 = 20m ( includes $14m of cash)
ppe = 0
ic = 20m

ebit = 8.6m

roic = ebit/ic = 8.6/20 = 43% pre tax.

ev/ebit = 50/8.6 = 5.8x! not expensive. not dirt cheap..reasonably cheap. Should compare to CNRD, UFPT
NI 5.5m
EPS $1.2

P/E = 13.5/1.2 = 11x.. and with extra cash
P/E ex cash = 8.6x!

EPS GROWTH last 3 years 0.65, 0.98, $1.2 ...20% or more
Sales growth 146m -> 206m -> 250m!! wow. 25% or more.

FCF = $5.5m or $2.5m (if u count for wc...recivables always more than payables by 3m)

buyback $1.5m in 2011
dividend $3m in 2011
total return $4.5m (7% yield on market cap)

P/FCF = 64/5.5 = 11.6x
EV/FCF = 50/5.5 = 9x reasonably cheap.

Question for someone who knows this better. Why are receivables always so much higher than payables. 3million is a lot for this size of company. I typically look at NI + D/A - Capex for FCF calculation. But taking a look at working capital changes, its always net negative for them. Hence cannot ignore and then FCF comes out to $2.5 million (small changes make a lot of difference to the multiples of FCF here).

Certainly, the company is on the cheap side considering the growth it has seen in the last 3 years and the balance sheet. ROIC is also quite good. Capital allocation or share holder return is also decent.

Worries are the customer concentration risks and small size player and pricing pressures.

I also took a quick look at Ingram Micro (IM) which is one of the largest players in the field. It also is reasonably cheap however I did not like its ROIC as it has so much invested in huge working capital due to inventory and receivables.

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Author: TebowMartian Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13399 of 20334
Subject: Re: Wayside - worth another look Date: 3/5/2012 10:16 AM
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i - if you click the rss feed:

http://www.thevalueguys.com/thevalueguys.xml

they list all the stocks they cover - 1/27/12 for that one

on that customer concentration, cdw is a consulting/reseller, so they have tons of customers, so in essence having sales concentrated with these guys is not an issue IMO

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Author: itconsultant Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13453 of 20334
Subject: Re: Wayside - worth another look Date: 3/8/2012 11:36 PM
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thanks

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