sales growth was actually 33% last qtr. if you listened to the call you know of what I speak.
based on the reasoning that K is gaining incremental traction, the new distributor in Canada, etc., one could reason that it will be higher this qtr. My guess is 35%+, possibly 40%. Who knows what will carry to the bottom line with the (alleged) stoner at the helm, but the topline figure should get this pos flying in two months.
The sales growth trend could be 33% as long as no special items were added to the second and third quarter numbers last year (assuming that you came up with the 33% increase by backing out the ingredient sales from the prior year).
The main reason I got out of the stock in November last year and waited for a pull back to get back in is the games that these guys sometimes play with the numbers.In the fourth quarter of 2011 the company showed a strong top line growth with very bad gross margins,but people read that as the company having strong growth in the fourth quarter.
On the call the management got on the phone bragging about how they had broken even on selling close to 1 million in excess inventory that they had over ordered.The two questions that immediately came to mind when this happened were why would the company need to sell off excess inventory that was relatively shelf stable and could be worked through in less than one quarter (primary guess was cash flow needs at the time) and if 1 million dollars worth of unfinished inventory was being added to the top line revenue in q4 of 2011 how would it be made up by the sales of finished product in the fourth quarter in 2012.The answer was that while the sales were more than made up for the fourth quarter numbers top line sales looked weak because the prior years games had 1 million dollars of unfinished inventory.The reality is that the sales trend at this company is intact and only looked bad because of the unfinished inventory sold in the fourth quarter of 2011.
The only apparent short run risk with this stock is that it did not sound as if they had taken care of the production and distribution issues half way through the second quarter and were saying that they were taking care of them without any real progress update.The top line sales for the second quarter should be nice ,but if they have not taken care of the issues the profit numbers could be just as ugly as in the first quarter.
Stoner's stated primary goal is top line growth, without having to go back out for additional funding, which he appears to have achieved. Cash flow appears to be next, with profitability a distant third place. Shareholders are holding rather than trading perhaps waiting for an acquisition which could take years. Meantime, the only opportunity is a price run based on a positive earnings release, next reporting scheduled in early Aug when Q2 numbers come out.