hatchmatcher likes to pretend like DGSE has never made a profit, but the facts paint a different picture. In fact, over the last 10 years DGSE has swung an operating profit in 8 of those years. The only two years that had losses were when gold prices fell off a cliff. It's difficult to make money in this business when gold prices decline 30% in a year. As I've said before, all this business needs is STABLE metals prices to turn a consistent profit. Obviously, if metals go up then that's icing on the cake. If they go down marginally then DGSE can still make money. What is not good for DGSE is volatile metals prices (especially to the downside). Traditionally, gold and silver have not been volatile except for brief periods over the last 50 years.The company has been in business for 35 years. You don't stay in business for that long by losing money. Now that they've closed Southern Bullion and are getting back to their core business model, this company should start turning a profit in the quarter ending September.
Sentiment: Strong Buy
I disagree. The fact that they are shutting down the stores that contribute to the majority of their debt tells me they understand how to cut losses and grow revenue so I would not define that as incompetence. Did they have issues in the past? absolutely,
will they repeat those mistakes probably not. Investing is about the future and not necessarily the past. Especially with different players.
Obviously its an insignificant amount of $. What is significant are the losses and incompetence at DGSE. Bottom line. Results. Revenue. Earnings. Growth. All lacking. Completely lacking, by any rational measure. They write entertaining press releases, I'll give 'em that. The next 10Q will be fun to read. Repetitive, but fun.
Sold my 5,000 shares at $6.15 years ago. Just watching the comedy of incompetence unfold since then. Predictable, but mildly entertaining.
We've been hearing the "we will be profitable soon" claims every quarter for years. It never materializes. Same old refrain. This company should not be public. It's a glorified coin and jewelry shop, that could make a million or two per year, if not for the public company legal, accounting and compliance costs, and the excess mid- level managers who do not generate revenue. It's a fatally flawed model, with incompetent executive management. Always has been. They lose money while other private operators in the sector have grown rich. They should be spanked.
Uh, they closed down Southern Bullion which accounted for 70% of the losses. This will be a profitable business in one more quarter doing $70 million + in annual revenue. I'd say that's worth more than $18 million, yes. And Smith is not selling if that's who you're referring to. Or maybe he is and he's breaking SEC rules by not reporting the sales. As a 10% holder he's required to file form 4's if he buys or sells.
Sentiment: Strong Buy
The company had $7.4 mil in net assets. Three year-over-year declines in revenue, cash, total assets, and shareholder equity. An operating loss last year of $2.65 mil. No discern able plan for growing revenue or earnings, and not a single member of executive management team with any experience in successfully growing a public company. And you still think the company is worth MORE than the current $18 mil market cap? Based upon what? A dusty Clem press release? Hope is a beggar, my friend. And don't forget the million + shares of overhang from a certain aging and motivated seller. This is a penny stock, barely hanging on to $1.50
They said multiple times over the past year they had accrued expenses in anticipation of the tax issue and now that the amount due is pretty much spot on to their expectations, the stock goes down? Laughable. Probably just price manipulation so they can take this private on the cheap.
Sentiment: Strong Buy
Um, gold has gone up 335% in the past 10 years. DGSE shares have declined by 36%. Not only has DGSE stock not "pretty closely tracked changes in gold", but it has underperformed nearly every stock, stock market, commodity, and fund on the planet. It has been an abysmal investment, unless you were "DOCTOR" (insert sarcastic snicker) Lenny. Assuming or concluding that DGSE shares price is related to the price of gold is like assuming that the price of Starbucks shares is based upon the price of coffee. Without intelligent and effective management, which is sorely and obviously lacking at DGSE, the price of gold will have no bearing whatsoever on the share price.
The fact that the share price continues to fall long after the qtr numbers have been released and in the face of rising gold price s smells of someone dumbing down the price. My guess they want to take it private and make an offer on the cheap. Surely they would not invite another SEC investigation.
Over the last few years the stock price of DGSE has pretty closely tracked changes in gold prices. DGSE went parabolic in 2010 when gold was soaring and then tumbled in 2013 when gold declined 30%. Obviously, the market has mispriced this stock several times before. The stock was probably not worth $10 a share in 2010-11, but it's probably worth more than $1.50 now.
Additionally, the company has been profitable several years out of the last 10. The company was profitable in 2004, 2005, 2006, 2007, 2008 (profitable except for an impairment charge), 2009 (profitable on a continued operations basis), 2010, and 2011. Obviously the last 2 years were not good, but in the face of unprecedented gold declines and the money pit that was Southern Bullion, it was not necessarily unexpected. With Southern Bullion now shuttered, the company is getting back to the profitable business model that worked for decades before 2010.
Sentiment: Strong Buy
DGSE is not a proxy for the gold market. They lost 29 cents per share last year. They have lost money in virtually every quarter for the past 10 years, except once when they won a big lawsuit from a #$%$. Perhaps there were more sellers than buyers, based upon the company's performance. I know that sounds like a whacky idea, but..........
And BTW captain, when exactly was that "past" when DGSE was profitable? I can't find it anywhere in the annual reports. Winning one lawsuit and calling yourself profitable that year is ridiculous. They have not made a consistent operating profit since the stone age, though good markets and bad.