Do you "really" expect to have a revealing, relevant conversation on a Yahoo message board
CFA my tookus -- Need to pen SA articles to make your dinero
My sense is that many of you are patient, and quite well informed about the business. I think anyone who owns this stock doesn't understand valuation and investing very well, but I have to admit that you guys are NOT the cokeheads who flip biotech and software stocks based on OMG it crossed the 50 day MACD!!
It seems many of you know Clearfield's products and market from experience in your day jobs. Is that so?
Among the richly valued micros I see there's this clump with two things in common: a) they're good businesses with good reputations, and b) they do work in industries that many folks know something about from their day jobs. (oh, and c) they are supremely overvalued.)
Which gets me thinking about whether, for example, the Clearfield investor base is unusual. Smart, patient, well informed about the biz, but not value conscious. And therefore quite unwilling to sell your shares regardless of price or fundamentals. That's why when a sexy biotech stubs their toe the stock craters (clueless traders own it), but when CLFD does the stock is robust.
Is this fair? Are many of you guys non finance professionals who buy solid companies in industries you're expert in from personal experience?
I am sure Niles will not reply to you as he is above that, but Niles actually discovered Clearfield when it was trading at $2.50 and off everyones radar. He post nothing but valuable insight and is an unbelievable resource. All of you should be thankful.
Ladenburg, the only analyst firm with coverage on CLFD, reiterated their buy rating yesterday. They feel that CLFD's growth story is very much intact and its just a timing issue as to when the Tier 1 players start ramping. CLFD's ILEC business (traditional Tier 3 customer base) was up 33% Y/Y in 1H/15 and their MSO and international business steady. Its clear that CLFD's new products are resonating with their customers and their market share is increasing.
Basically the delays in Google's Austin deployment, which CLFD is supplying, is what caused the revenue/EPS miss. Once Google's temporary issues are behind them regarding rights of way and permitting and the deployment starts ramping than revenue will start flowing again to CLFD.
From yesterday FWIW:
Ladenburg update report
Slower-Than-Expected Ramp But Story Is Intact; Maintain BUY Rating
Clearfield IS a great company. But they're great like the Oakland A's under Billy Beane. They've exceeded what anyone could've expected considering the obstacles they face and they'll likely continue to make smart decisions and execute competently in the future.
What they're not is competitively secure in a way that let's you forecast relative outperformance way out into the future, like, say, the Yankees w/ their zillion dollar payroll.
What happens when the Red Sox copy Beane's ideas? What happens when that rural fiber boom you're excited about gets big enough to trigger Alcatel, Corning and Emerson to serve it aggressively?
Small electronics contract manufacturers eek out a living on $1-5m deals that don't interest Flextronics and Foxconn. Some eek out a great living! But no one values them in a way that requires massive revenue and earnings growth because it's understood, a) that their advantages don't scale, and b) that continued excellence is HARD in such a competitive space.
How to value a great small contract manufacturer? Make sure that they can achieve valuation-justifying earnings in a timeframe (1-3 years) that you've got visibility into.
You get my point? Clearfield's sales/share are $4.30. You require a much longer growth runway than you can plausibly expect.
could get downgrade anytime now
On the contrary shame on both of you- first to Niles for digging up news and momo that really doesn't translate to revenue and creating something that isn't even there. And thanks to this type of behavior is even more obscene.
There are many posters out there that post garbage and it is obvious. It is ignored. But when you come here appearing to know more about the company and suggesting opportunities that don't exist while appearing intelligent, you are sucker punching innocent investors that buy in believing the market got this wrong.
Niles- you did this on tXCC and look at how that turned out.
OK ... that quarter was a stretch on my part, from memory. The point is that here is a tiny microcap that has a partner relationship with one of the globe's major players -- Google -- who has given the major telcos and cables (read about the sudden, 180 degree turns in their plans) a kick in the pants with faster speed at lower cost. Further, this tiny firm is also a partner with greenfield ISPs and cable firms. The US is behind the 8-ball in download/upload speed and we know that over the next few years, there is a strong likelihood the Clearfield will ride a very, very large wave of business. They have expanded domestic plant, have added Mexican capacity to help prevent being undercut by competition, and their management has, by and large, been buying shares in the open market.
We have multiple examples of mo-mo firms who have massive revenues and very little profits ... and the market continues fawning over their prospect, at incredulous PEs. I prefer to ride this no-debt, small player for a few years and will take the risk that they will grow into their big pants. In short, yes, I understand what I am buying and I anticipate that Clearfield's domestic sales will blossom, unencumbered by the path of the dollar and/or global growth concerns. As Cheryl intimated in the field report -- when, not if. All the best.
this was my point in an earlier post - the market cap vs fundamentals seems out of whack.
Shocked that after this AM's release it is down just under 10%
Get out out run run to theexirt exit door better be sdafethan sorry you will lossalot lot more money
There was a quarter where CLFD earned 37 cents a share (in 2012?). FttH installations -- what assumptions do you make on the CAGR of that annual market over the next five years and what percent market share would Clearfield take? Tough to get arms around these estimates, but past numbers from a handful of cities do portend to bust open the seams. Microcaps do have their high-risk factors.
Their sales are running (generously) at $60m. Their operating margin potential is no greater than 15%. Current margins are far lower.
To earn $21m net at a 35% tax rate at 15% OM they need $215m in revenue. Revenue must more than triple.
Do you guys understand what you own?
An update: my two key take-aways from today's release, coming from a read of quarter's and last quarter's release, as well the "Field Report" issued this morning.
LAST Q's growth expectation: "Moving forward, we remain comfortable with our previously issued outlook for fiscal 2015 that Clearfield's revenue will continue to grow at an annual pace consistent with our historical compounded annual growth rate of nearly 17%."
THIS quarter's: "Moving forward, we believe the growth of sales to larger ILEC customers and our growing share of that market will continue. The increase in backlog as of March 31 as well as recent bookings and forecasts received from both of the ILEC and CLEC customer groups supports Clearfield's outlook of a strong second half. However, due to the uncertainty of the market dynamics affecting both the ILEC and CLEC customer groups, annual revenue growth may or may not reach levels expected at the start of the year. Accordingly, we are declining to provide a more definitive growth outlook at this time."
In the field report, they emphasize the unknown timetable of installations (permitting and regulations), while acknowledging the extensive press reports on FttH prospects. Cheryl stated that the market is now Fiber to the Press Release, setting up expectations but not enough happening on the ground. Later in the nine minute report, she references a "look" at competition that tells her not much is happening with them, as well. I don't think she wants to get caught over-promising with market conditions that she does not control.
SHARE BUYBACK for the quarter was $679K, with seven million dollars still authorized. I suspect that this will keep a floor on the pps.
Sorry - looks like you will be waiting for another year.
"annual revenue growth may or may not reach levels expected at the start of the year. Accordingly, we are declining to provide a more definitive growth outlook at this time.
and Niles in particular, for digging in and getting scraps of news on Clearfield. Tiny company, small float, and the only PR coming from the company in the past three months is news about new products. Peter Lynch of Fidelity Magellan fame is quoted as saying (in my own words) that the more rocks you look under, the better your chance of finding something of value. Regardless of tomorrow's release, it is clear that they are building a future in a significant, domestic growth niche. All the best.