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НТЕ Message Board

  • smkros smkros Nov 8, 2012 5:13 PM Flag

    NTE will be $25 by April

    This company is goint to report incredible year over year growth for the next 4 quarters based on the current business it has for tablets and smart phones.

    It looks like Q4 sales will be around $490m. Last year's Q4 sales were $129m - which is 280% growth.
    If Q113 is flat with Q412, YoY growth will be 421% for the Q1 quarter.

    I think Q4 and Q1 earnings will be around $0.70 per share. If so, then the TTM earnings after Q1 will be $2.14. EMS companies trade on average for 12x TTM earnings, which means the price should hit around $25 per share. It's very possible NTE's multiple will be higher.

    Sentiment: Strong Buy

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    • SMKROS:

      Yes, I think you are right. NTE is going to be one of the strongest stocks that there is.

      There is only two potential problems:

      A). The market is spooked, and P/E ratios are compressing. Apple is trading for 12x earnings. Apple is bluest of blue chips. They are growing 25% a year....Sitting on $100BB of cash. Probably priced too low, but still shows problems. Dell is trading for 5 P/E, Intel for 9, Cisco for 11. A nightmare scenario is that NTE is making $2.50 to $3/share in net earnings and is trading for a 5 or 6 P/E, thus $14 to $16.

      B). Sharp falls apart, resulting in tremendous supply chain problems for NTE.

      I don't think either will happen, and I think NTE will trade much higher. In fact, if you are willing to go out a year or 18 months, I think NTE could be trading for $30+.

      NTE isn't a sure bet, but it is pretty darn close.

      We'll see.

      Any thoughts?

      Sentiment: Strong Buy

      • 2 Replies to dtejd1997
      • I think you make two good points. Sharp is by far the biggest risk and needs to be monitored closely. However, I do think the risk is minimal for the following reasons:

        1) Given that this product is a rare bright spot for Sharp, ensuring its uninterrupted operation will be in all parties' interest even in a bankruptcy event.
        2) Sharp's end customer has a vested interest to minimize the disruption to the supply chain. Spotter9999's comment about Apple injecting some cash into Sharp to ensure payment to the supply chain makes business sense to Apple. I would imagine this is a pre-payment on Apple's part for the purpose of making sure Sharp isn't cut off from its suppliers.

        As for the multiple compression, this ebb and flows. I hope once we get through the fiscal cliff the market will focuse on fundamentals, which I think look better than they have in a long time. I love seeing housing starting to come back to life. There is no better stimulus for the economy than for housing to start contributing to growth again.

      • Read an article yesterday that last quarer, Apple pumped $2 billion into Sharp. In Apple's recent quarterly report, this investment showed up as an unexpected expense but did not say it was for Sharp.

        Apple cannot afford any production stoppages with Sharp. Sharp will be fine long term. But maybe there is an opportunity for additional vusiness for NTE somehow.

        Sentiment: Strong Buy