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No. of Recommendations: 2
Seems like one for further due diligence.

Net cash is significant. Assuming roughly $140 million in net cash that's roughly $7 per share on a $15.25 stock.

Reason for further inspection:

EV/IC with cash is .53X. That's too cheap

EV/IC w/out excess cash is 1.69X. That's more reasonable and makes more sense from a capital perspective but still on the low side if the ROIC calculation below is anywhere near accurate. ROIC/WACC as a no-growth valuation benchmark would be 1.9X if assumed WACC of 10%.

EBIT/EV TTM was 13.2%. So your pre-tax owner's earnings yield is attractive. Put this against whatever hurdle rate you want. Consider 6% as a benchmark for instance.

ROIC based on IC w/out excess cash is ~19%.

So cheap stock with profitable business and excess cash.

Quick perusal of 10-K doesn't give any iffy feelings like so many small caps can -- so that's another positive. In other words on the surface at least it looks straightforward enough. I mean 'err boring!




chessburger
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