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I just posted this on the SMTI board:
SMTI just announced results that smashed anyone’s expectation. The stock is so grossly undervalued relative to its fundamentals and growth potential, that it will likely take the market quite sometime to digest and comprehend its true worth. There should be a relatively large window of opportunity to get in at excellent prices (under $20) because it isn’t followed by anybody. In fact, the message board had one poster during the month of July! SMTI has recently turned profitable in a big way after a period of restructuring, large capital expenditures, and the assembly of a new management team (including a new CEO in 2002). The company lost $2.02 per share last year. SMTI just posted .42 EPS on a 33% improvement in revenue versus last quarter. Management just stated that the company has turned the corner for good. The company should post Q1 and Q2 results similar to the 4th quarter. According to management, “We are in a solid position to sustain 4th quarter’s revenue and earnings momentum into the new fiscal year” Backlog currently stands at $45 million. Management stated that Q3 and Q4 results should exhibit “revenue and earnings growth and momentum” as new contracts go into effect. Thus EPS for fiscal year 2005 should be approximately $1.80 at the low end. At an industry standard PE of 25, SMTI could and should trade in the $40-$50 as investors begin to understand the story. Here are some interesting facts regarding SMTI:
Revenue progression last 8 quarters (millions) 17.6, 15.5, 17.4, 20.2, 20.7, 20.1, 22.5, 29.9
EPS last 8 quarters: (last 5 quarters adjusted for 1 time gains and new share issuance): (-.53), (-1.55), (-.46), .25, .17, .09, .11, .42- Basically, SMTI was being valued (approximately $7) prior to August 9, based on eps of approximately .10 per quarter. The company will now earn 4-5 times that level.
-Company is rapidly expanding revenue and earnings, yet plant utilization is only at 50% (lots of room for further growth)
-Market cap of $20 million. About 1/7th of fiscal 2005 sales
-Low float – 2.9 million shares outstanding
-Insider buying
-Gross Margins improving dramatically due to cost control and economies of scale
(should continue to improve as capacity utilization increases)
-Operating expenses continue to decrease
-EMS (Electronics Manufacturing Services) market is strengthening. Mgt sees rising demand from international medical equipment OEMs (Original Equipment Manufacturers)
-SMTI’s customers are extending contracts and placing additional product lines under long term agreements.
-Thailand facility’s capacity is currently being doubled and will be fully operational in October. Much of new business is being sent here due to inexpensive labor and much improved gross margins. Production in Thailand “Growing strongly”. Will continue as it will be ISO certified by the end of the year.
-Better cash flow- cash conversion lowered to 37 days.
-New credit facility in place with 50% additional borrowing available ($15 million). Maturity date extended to 2007. Additional $2.5 million extended for capital equipment expenditures. Co. will be restructuring debt going forward. New credit facility will reduce interest expense over next quarters therefore increasing profitability.
-All plants should be ISO certified by year end- according to management, this will help sales in medical market. This will be a competitive advantage for the co. Mgt. Anticipates an increase in market share. Moonpark plant received ISO certification in June.
-Robert Miller hired in March as VP of Worldwide sales and marketing – 15 years experience in sales in electronics industry. Will penetrate new markets and accelerate sales growth.
-Co. currently hiring employees throughout company. Check co. website and employment sites.
-Retained Silverman Heller Associates in March to implement an Investor relations program.
-Sales breakdown- Medical: 31.3%, Industrial controls and instrumentation: 23.2%, Security: 9.9%, Telecom: 9.7%, Aerospace: 8.2%, Consumer 7.3%, Computers: 4.1%, Other 6.3%. The company is much more diversified than it was a year or two ago. Some customers: GE, Level 3, Medtronics, Philips- Customers are adding additional product lines to new contracts.
Bottom line- This company is a steal at these prices and given excess capacity, could show amazing additional growth if company secures additional contracts going forward. Should turn out to be an excellent long term investment.
SMTI just announced results that smashed anyone’s expectation. The stock is so grossly undervalued relative to its fundamentals and growth potential, that it will likely take the market quite sometime to digest and comprehend its true worth. There should be a relatively large window of opportunity to get in at excellent prices (under $20) because it isn’t followed by anybody. In fact, the message board had one poster during the month of July! SMTI has recently turned profitable in a big way after a period of restructuring, large capital expenditures, and the assembly of a new management team (including a new CEO in 2002). The company lost $2.02 per share last year. SMTI just posted .42 EPS on a 33% improvement in revenue versus last quarter. Management just stated that the company has turned the corner for good. The company should post Q1 and Q2 results similar to the 4th quarter. According to management, “We are in a solid position to sustain 4th quarter’s revenue and earnings momentum into the new fiscal year” Backlog currently stands at $45 million. Management stated that Q3 and Q4 results should exhibit “revenue and earnings growth and momentum” as new contracts go into effect. Thus EPS for fiscal year 2005 should be approximately $1.80 at the low end. At an industry standard PE of 25, SMTI could and should trade in the $40-$50 as investors begin to understand the story. Here are some interesting facts regarding SMTI:
Revenue progression last 8 quarters (millions) 17.6, 15.5, 17.4, 20.2, 20.7, 20.1, 22.5, 29.9
EPS last 8 quarters: (last 5 quarters adjusted for 1 time gains and new share issuance): (-.53), (-1.55), (-.46), .25, .17, .09, .11, .42- Basically, SMTI was being valued (approximately $7) prior to August 9, based on eps of approximately .10 per quarter. The company will now earn 4-5 times that level.
-Company is rapidly expanding revenue and earnings, yet plant utilization is only at 50% (lots of room for further growth)
-Market cap of $20 million. About 1/7th of fiscal 2005 sales
-Low float – 2.9 million shares outstanding
-Insider buying
-Gross Margins improving dramatically due to cost control and economies of scale
(should continue to improve as capacity utilization increases)
-Operating expenses continue to decrease
-EMS (Electronics Manufacturing Services) market is strengthening. Mgt sees rising demand from international medical equipment OEMs (Original Equipment Manufacturers)
-SMTI’s customers are extending contracts and placing additional product lines under long term agreements.
-Thailand facility’s capacity is currently being doubled and will be fully operational in October. Much of new business is being sent here due to inexpensive labor and much improved gross margins. Production in Thailand “Growing strongly”. Will continue as it will be ISO certified by the end of the year.
-Better cash flow- cash conversion lowered to 37 days.
-New credit facility in place with 50% additional borrowing available ($15 million). Maturity date extended to 2007. Additional $2.5 million extended for capital equipment expenditures. Co. will be restructuring debt going forward. New credit facility will reduce interest expense over next quarters therefore increasing profitability.
-All plants should be ISO certified by year end- according to management, this will help sales in medical market. This will be a competitive advantage for the co. Mgt. Anticipates an increase in market share. Moonpark plant received ISO certification in June.
-Robert Miller hired in March as VP of Worldwide sales and marketing – 15 years experience in sales in electronics industry. Will penetrate new markets and accelerate sales growth.
-Co. currently hiring employees throughout company. Check co. website and employment sites.
-Retained Silverman Heller Associates in March to implement an Investor relations program.
-Sales breakdown- Medical: 31.3%, Industrial controls and instrumentation: 23.2%, Security: 9.9%, Telecom: 9.7%, Aerospace: 8.2%, Consumer 7.3%, Computers: 4.1%, Other 6.3%. The company is much more diversified than it was a year or two ago. Some customers: GE, Level 3, Medtronics, Philips- Customers are adding additional product lines to new contracts.
Bottom line- This company is a steal at these prices and given excess capacity, could show amazing additional growth if company secures additional contracts going forward. Should turn out to be an excellent long term investment.
(is that really the low for the day? Well, up to now...) And it is testing the 52 week high. Were is Spike when you need him? First sell target: 12.92.
I plan to sell out of this stock gradually as it climbs (assuming all the wild dreams of the Yahoo SMT board materialize), and I consider your 13.15 a nice support for my 12.92 target. Thanks again!
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