"Margin of Safety Value Driven Ideas" (04/22/13) Update Continued for MFLX & FMAO

MFLX:Multi-Fineline Electronix, Inc. “provides  printed circuit and component assembly solutions to the electronics industry. The Company's services include design and application engineering, prototyping and high-volume manufacturing, and turnkey component assembly and testing”

MFLX value has been enhanced with a -45% price change over 52 weeks near a 3 year low. It now trades at a historical low valuation based on P/B. P/B is .79 near 10 year low of .80 versus 5 year average of 1.30, P/S is .40 versus 5 year average of .70. and at 3 year low of .40.  Margins have been on the decline but margins mean revert in this industry

Strong financial position and with outsized industry under performance makes MFLX a micro cap value stock that is likely to mean revert. The most recently reported quarter 12/31/12 revenue increased by 21% to 289.7M.

MFLX Price on post date 04/22/13 = $14.02

Market Cap:357.87M ; Enterprise Value:256.44M

Price/Sales 0.40; Price/Book:0.77

Enterprise Value/Revenue:0.30 ; Enterprise Value/EBITDA:3.17

Qtrly Revenue Growth:21.00% ; Total Cash Per Share:3.90

52-Week Change:-44.73% ; Held by Insiders: 63.22%    



FMAOFMAO - Farmers Merchants Bancorp is a regional bank founded in 1897 and based in Archbold Ohio. This OTCBB listed bank stock provides various financial services to individual and small businesses in northwest Ohio and northeast Indiana. It has 19 offices located in the Fulton, Williams, Henry, Defiance, Lucas, and Wood counties in Ohio; and 3 offices in DeKalb and Steuben counties in Indiana.
This conservative stock has slowly moved higher but is worth a look. Recognize that it’s trading close to 3 year highs for price and price to sales. It still trades a nice discount to book value. Current dividend yield is 3.80%.

FMAO: Price on 04/22/13 = $22.25 up from the previous day close of $21.55

Market Cap:103.53M; Enterprise Value:124.93M

Trailing P/E:10.68

Price/Sales: 2.78 ; Price/Book:0.94 ; Enterprise Value/Revenue:3.35

Qtrly Revenue Growth:2.20% ; 52-Week Change:3.97%   

The Bank owns all of its office locations, with the exception of Angola, Indiana. They own a total of 17 properties all on the books below fair market value. Above industry averages for ROA, Net Margins, ROE, Debt to Equity


CH868 said...


MFLX's gross and net margin have been declining for the last f years.

ShadowStock said...

GM% is an issue but still warrants a mention as something to be watched. Not an indication of future performance but the stock has moved from a low on 4/22 @13.89 to close at 15.05. Stock is down 45% with a decent financial position, modest share count reduction, value institutions like Royce and Kennedy capital holding positions

“Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”
I would also add gm% can be mean reverting...

Colin Heckman said...

How long to you plan to hold on to these stocks? In other words, how do you determine price targets?

Colin Heckman said...

How long to you plan to hold these stocks? In other words, how do you determine a price target?

ShadowStock said...

Hi Colin

I don’t forecast price targets. My goal is to provide the best value based ideas. These ideas should be evaluated as a part of one’s portfolio. You may want to create a watch list and purchase on weakness if the idea still represents value.
The sell or buy decision is never mine but instead the effort to create a high quality deep value fishing spot. For example the other day I picked up a few shares of risky nano cap GLUX as the price hit 1.31 to 1.41.This was after the mention over a week ago.

Thanks John

Colin Heckman said...

OK. I like to buy on weakness. However, I was talking more about how to know when to sell, which I've found is more difficult than knowing when to buy. So of these undervalued micro-cap stocks have considerable upside.