CVR( Chicago Rivet & Machine)
Enterprise value is 10.9 million with a market cap 15.45 million.
The stock in my opnion is close to being fairly valued at today’s prices but if operational performance prior 2009 is achieve the stock price should significantly outperform the general market. The company is distressed based on operating results over the past 2 years excluding the most recent quarter. But I believe the balance sheet will help insure the future. The stock is 5.02% off the 52 week high but 48.29% below the 5 year high offering potential mean reversion. The most recent financial results demonstrated that industry economics may be improving and the company’s bleeding may have stopped.
“Revenues for the first quarter of 2010 were $6,761,393, an increase of $2,002,103, or 42.1%, compared with the depressed levels of last year’s first quarter, when the impact of the domestic and global recession was most severe. While the increase in sales is significant and reflects the rebound in automotive production from a year ago, as well as improvement in the overall economic environment, current year sales are still approximately 20% below the first quarter of 2008. The increase in revenue combined with previously instituted cost control measures have resulted in a net profit of $33,869, or $.04 per share, compared with a net loss of $623,861, or $0.65 per share, in the first quarter of 2009.”
Don’t expect this 2.04% current dividend yield idea to move quickly as it trades near its 52 week high. But it’s worth monitoring.
Investment points:
17.50% held by insiders
19.80% growing YOY quarterly revenue
SGA expenses reduced over the past 3 years
Total liabilities reduced from 2007
Gross margins have been declining over the past 2 – 3 years directly impacted by increasing commodity prices
Relatively substantial real estate holdings, 5 manufacturing plants purchased before 2000
Naperville, Illinois ;Tyrone, Pennsylvania; Jefferson, Iowa; Albia, Iowa; Madison Heights, Michigan
Additionally, company owns their headquarters located in Naperville, Illinois
SGA/Revenue at a reasonable level of 22.60%
Share count has remained static over the past 5 years.
Trading at a potential large discount to normalized earnings based on the average 2006 to 2009 operating income to current enterprise value. If operating income returns to the average 06 to 09 levels the stock should eventually rise back over $20with the current dividend.
