11/28/2010

Continued:Overlooked Valuation Improvements

In Saturday night’s post I mentioned CACH, CNTY, LOV, UTMD and MASC as examples of companies making changes to potentially improve the company’s value but not necessarily recognized in the stock’s current price.


I was looking to find micro capitalization stocks reducing total debt over several years , buying back shares and reducing their SGA expenses to sales over time. These improvements at times may not be fairly represented in the market value. I also restricted my search to companies under 100 million with a strong balance sheet.

Are these companies creating value under the institutional radar do to their tiny market size and improvements in overlooked value creation criteria? It’s unclear.

MASC (Material Sciences Corporation): Enterprise value averaged about 104.6 million for 2006 with a current EV of 64.8 million or a current per share market price of $4.99. The average per share price in 2006 was $11.27. Shares outstanding was 14.62 million (2006) brought down to 12.91 million. For the TTM net income of was .31 per share versus .35 for 2006. The average price in 2006 using the month end prices for 12 months in 2006 was 11.27 versus Friday’s close of 4.99.

LOV (Spark Networks): Enterprise value averaged about 213.3 million for 2006 with a current EV of 59.9 million or a current per share market price of $2.91. The average per share price in 2006 was $11.27. Shares outstanding was 30.5 million (2006) brought down to 20.58 million. For the TTM gross margin % was 67.20% showing an improvement over 64.30% for 2006. The average price in 2006 using the month end price for 12 months in 2006 was 6.03 versus Friday’s close of 2.91.

CACH (Cache Inc): Enterprise value averaged about 306.06 million for 2006 with a current EV of 58.777 million or a current per share market price of $3.93. The average per share price in 2006 was $10.18. Shares outstanding was 16.22 million (2006) brought down to 12.77 million. For the TTM P/S and P/B have improved from 2006 to the TTM but all other profitability metrics have suffered. The average price in 2006 using the month end price for 12 months in 2006 was 12.79 versus Friday’s close of 3.93.

CNTY (Century Casinos): Enterprise value averaged about 294.1 million for 2006 with a current EV of 58.8 million or a current per share market price of $2.37. The average per share price in 2006 was $19.29. Shares outstanding was 23.93 million (2006) brought down to 23.76 million. The average price in 2006 using the month end price for 12 months in 2006 was 19.29 versus Friday’s close of 2.37.

UTMD was also mentioned in the prior post


"If value investing always worked it would stop working"

It’s interesting to see firms dramatically reduce debt, share count and SGA but these changes are not reflected in the stock price over periods of time. I’m not saying the above represent discounts or bargains. They need more work.

3 comments:

Anonymous said...

Sounds good, I like to read your blog, just added to my favorites ;)

Anonymous said...

Straight to the point and well written! Why can’t everyone else be like this?

ShadowStock said...

Appreciate the comments! My time is limited but even though the posts are brief they are supported by countless pieces of positive data to support the mention.

"My 2011 objective is simple;Provide a continuous flow of the best overlooked value based ideas."