No one invests in a company simply because it has cash on hand, although that might be comforting. Investors buy shares to participate in the future earnings of a company.
NTE said in it's last quarterly results release that the road ahead will be a rough one and that is my concern.
Your right --but the combination of cash and earnings / earnings potential makes this company attractive. - In this down environment cash is king. - Now trading close to the cash on hand - You could sell the whole company in a rummage sale / fire sale and still come out ahead. - Or the cash could be used to make "fire sale purchases" of other beaten down undervalued companies that would better psoition NTE for strong earnings once things turnaround __AND THEY WILL turnaround.
"no one invests in a company just because it has cash on hand"
OK, but we're not talking about some kind of money-losing pharma startup here. Namtai has one of the highest operating margins in the EMS industry. ROE on the noncash assets is over 50%. And it's selling for basically the cash in the bank. And they have a history of paying out cash.
Unless the business permanently falls apart, the stock is worth 10 or 15.
I could care less if they go bankrupt...it is trading in negative valuations right now. It has 271M in cash, 10M in debt...and a market cap that went into the 237M range on Friday. That is insane. Taking its cash (271M) that is probably yielding about 5% or more due to the t-bill yield that the jump in the value of bonds (13.6M), NTE can stop operations and pay about 0.33/share in dividend (just from the interest on its cash/bond holdings)! That is a 5.6% yield for doing NOTHING! You can't get that return in the treasurys by buying today! Plus, it is in cash at NTE and was already in bonds (thus, they got a massive return when bond prices skyrocketed and the dollar has now strengthened). NTE could be sitting on more than 300M in cash right now because of all this...
We are not headed to another depresioin. By the end of the second quarter of next year we will see that the economy has stabalized and is beginiing to recover. By the end of next year we will be in a positive growth mode for the economy. Buying NTE for less than the cash on hand now and getting paid 18% while you wait out the macro changes will give a very nice total return in 2-3 years.
What are they doing to generate earnings, which is what you assume? Are they getting new contracts? Are earnings slowing? No one on this site considers this, only how much money they have in the bank. Future dividends could use this up.
If the company was purchased and sold as an ongoing concern (all assets equipement business practices - customer list etc. Without the cash- It sould easily bring $4-$5. (Porbaly more like $7- Buit if you just take say $4.5 then pocket the $6 in cash you still have $10 or more. - If they just break even (and maybe a litle more) you could pay the dividend for years out of cash on hand and get a 10% return just from the dividend. - If they continue at the current income rate they will add to cash. - if they increase sales and earning-well you get the idea- very undervalued here
Market cap = 237M when it was at 5.30/share
Cash = 271.8M
Debt = 10M
Cash - Debt = 261.8M
261.8M - market cap = -24.8M
At one point on Friday, NTE was trading at a negative 24.8M enterprise value. As it is now, NTE has an EV of only 5M! Thus, NTE is being priced around 12 cents per share.
Where is the financial data on NTE? The stuff on Yahoo is for year 2007. Nowhere is the data for 2008. They had good balance sheet in Dec 2007, but this was a full year ago. Maybe by now they blew through their cash.
Geez, buy a brain?
They probably have more cash now if they've collected the receivables at Sep 30
This company makes a lot of cell-phone related components which is not a bad market even with the global recession.
Its a steal at this price and below, It probably will retest the low $5's which is where my basis is