I think the recent rise is due to the rise in copper prices. The company can pass on these increases in costs on due to the fact they purchase the copper in the past and now can sell it a current prices, meaning thier inventory of copper apprecated and their earnings will now encrease due to this win fall. This building season is gearing up and wire will be needed. Earning estimates will be going up! The stock will be going up! We hope!
As of last quarter WIRE reported an inventory of 60M and a net recievable of nearly 3 times that. I agree with you that they doubled the value of thier inventory, but that would only account for a 25% upswing in assets. Not to mention that this will be a one time gain for the recent upswing in copper prices (they can't get this gain again from previous increases, only future increases).
Great piece of the Encore Pie, but not the engine.
Still waiting on someone to help me think out loud about this quarters estimated reports (in it I doubled the value of inventories just as Firebird is suggesting...is that better encorewirefan?)
Confident that they'll beat estimates, not kill them like last time. Taking a rolling 12 months' estimate and with a moderate PE ratio as a quick analysis, I value Wire at about $55.00. Hopefully, solid earnings will shake out the shorts and others will realize how good this company is now and going forward.
Interesting scenerio!!! What about future purchase of copper to make wires? The rise in copper would also reduce the profit margins thus guidance could be a bit disappointed. Keep in mind that guidance is just as important, if not more important than the earnings itself. Good luck.
Some of this is like fingernails on a chalk board to me. I will believe that Encore Wire is in the speculation business when I read it in a company report. Until then I will assume that excess wire inventory is used to leverage out orders at a below competition prices. Or atleast thats how I buy it. There is one MAJOR reason prices are currently going up and when someone actually says it and not the default "copper is up" I will applaud them for their dd. IT ISNT FUTURES SPECULATION.
Q Q yr nyr
Current Estimate 0.61 0.80 2.61 2.66
7 Days Ago 0.61 0.80 2.61 2.66
30 Days Ago 0.55 0.70 2.41 2.66
60 Days Ago 0.34 0.42 1.69
90 Days Ago 0.32 0.42 1.55
Currents estimates are going up even before spike in Copper prices.