Looks like they are back on track to make 120 million a year gross, and even at conservative margins of 1% to the bottom line (and I know they can do better and i intend to address this at the meeting), that is just about .45 a share for 2011, so a 15 pe and this is a 7 dollar stock. If they can push higher margin products (hello!), they can get to 1.5% net and then you have .75 a share. It is really that simple.
I see your point...and NSYS is very cheap on a book value basis as well.
But the fact is they only made .05 for the quarter, and without the tax benefit, they would have made .04. Fully tax the .04, and they made a normalized .03/share. Now, their could be some one time expenses related to the acquistion (have to wait for the 10K, or the CC for more info), but its a long stretch from a three penny quarter to .45 - .75 for the year. Not that its not possible.
I think the biggest headwind will be the increasing cost of raw materials hitting margins in 2011. This may hamper leverage to the bottom line...and probably had something to do with their blah bottom line performance this quarter.
if i wanted shi% out of you i would squeeze, but since you asked, here is what needss to be done:
First off, give the CFO one year to save his job - meaning cut costs or else - i think they need to move more labor down to mexico, you have a neo colonial marxist in the white house and it is time to contribute to his jobless recovery by moing stuff to india.
I would suggest getting rid of some of the headcount at the HQ. A buddy drove by and it was looking a little like there were too many people - they still have the same expenses.
as a reward, if they hit margins, they get stock.
Second, give the head of sales 6 months to come up with a plan to get sales to high margin businesses. go after medical exclusively and industrial second.
THird, get new board members. They need younger people. As far as i can tell, they have no tech savvy board members - i cannot believe they cannot make more product for high margin industrial like oil producers, chem companies, etc. Look at a company like CRUS, they have a young executive who got them in the Ipad even though he had to go to bangkok and get all kind of funky diseases.
Fourth, there is a problem with myron kunin's shares? Does he have an estate planning attorney? Why are there no gifts to his kids or family members of his shares when the shares were low, why no GRATS of sales to defective trusts? IF his estate needs to sell, everyone suffers. Also, i do not like that he has pledged the stock.
Having said all this, those that survived this obama lengthened depression, can do well, but there is a new reality.