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Universal Security Instruments Inc. Message Board

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  • Jeris3 Jeris3 Feb 17, 2007 5:25 PM Flag

    UPG...

    Dave, I will give you my example of a UUU type company . Relm Wireless Corporation (RWC). Just like UUU about 4 years ago they realized that their future was with the wireless communication they were making and they sold off or discontinued other areas of business. They restructured their sales and marketing organization...sound familiar? From 2003 to 2005 working capital increased from 5M to almost 19M. Total assets went from 12M to 31M. Long term debt was reduced to 0. Stockholders Equity went from 5.9 to 27.8M....so similar to UUU. Sales increased from 19.7M to 28.5M and cost of products went down from 61% to 48% of sales. Net income increased from 4.4% to 36% and all the while they were increasing funds for research and development and coming out with so many new products. UUU has 17 employees and RWC has only 83. Most all of their products are outsourced. This UUU sells for a little over $6 ... very close to the price of UPG. They have been benefitting from deferred tax asset contributions to their income statement. They have 2 years left of similar assistance then they will be used up. The company has products that are used by the USPostal Service, Fire-fighters, police, schools, businesses and corporations and the military, etc. ....where ever they need secure and dependable communication systems. Motorola has 70% of the business they have only 1.5% but they are increasing market share just like UUU. They have 14M shares. Their CEO Mr. Storey has a taped discussion on the company made in December and still listed with company news events if you're interested. See if you don't see the connection between these two companies. Check out my figures and do your own d/d. My opinion isn't enough. Jeris

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    • Jeris3, thanks for the tip.

      If you have followed the company, could you elaborate a little on UPGs income decrease? I see that the companys sales are growing at a healty rate, while income decreased, e.g. there seems to be an erosion of margins in UPG. This might not be so bad if this erosion in margins is due to capital investments or other one-time expenses. If UPG can generate income growth from their sales growth, it will be a bargain at PE=7.8.

      Any thoughts?

 
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