All, Just got my TRIB annual report and am going through the Ratio Ritual Check my math on this but this is what I see:
Current Ratio 2.686872316 This is very good. BUT it looks higher than it really is because TRIB seems to have a lot of inventory on hand
Debt/Eq 0.033497425 Unreal: These guys have practally NO debt
Inverntory Turns 1.287594492 Ok, here is where it gets ugly. They are NOT moving out inventory as far as I can see. 1.3 is a VERY low turn rate. Should be in the 6-8 range. Does anyone know why these guys have so much inventory on hand. Did I get this one wrong?
Profit Margin 0.482173451 Unreal: HUGE Margins
ROE 0.73652876 Again: HUGE.
This company is a paradox to me. Everything EXCEPT the inventory numbers look great. They look to have a great product line and they are in a great area which big upside. Either this stock is VERY Undervalued or I am missing something
I enjoyed your post--unlike many of others on this board, it is rooted in some reality other than pure hype or negativism.
I am not an expert on ratio analysis, particularly with no peers at hand, but I welcome your comments on the annual report, which I received yesterday.
On the plus side:
A very professional presentation for so small a company. Collectively, the management team has interesting experience, though one American has experience with Epitope--which was rather checkered.
They clearly want to grow the company, "both organically and through acquisition," as stated on page 5.
Their cash position is a plus, and yes, they have retired debt and have instead used their stock as currency.
This leads to the downside:
Revenue growth is only about 14 percent. This is none too shabby, but it is far from spectacular, and raises questions about sustained earnings growth over the long-term, particularly if there is further dilution. Given their stated desire to grow, and their agreement with HiberGen--that seems inevitable, unless,of course, their takeovers are immediately accretive.
Note 23 on page 37 appears to confirm your suspicion regarding inventories. My question is whether this build-up is attributable to general business conditions, the acquisition of Bartels, or a negative reaction to their product?
Another negative--and I welcome feedback on this point--is on page40, Note 28, "Related Party Transactions." This note begins as follows: "The company has entered into various arrangements with JRJ Investments (JRJ), a partnership owned by Mr. O'Caoimh and Dr. Walsh, directors of the company, and Mr. O'Connell, a former director. . . .The note details the fact that JRJ rents the office space in Ireland to TRIB. While the note states that the rental is market set and favorable to the company--I think this is problematic. Like it or not, this gives the appearance of conflict of interest. I don't like this one bit.
In general, this report confirms my earlier postings. The company is probably solid, but it may be a "commodity" business with unspectacular earnings growth and margins. That is why the market may not care about the FDA approval.
Another take on this report--the Board is trying to juice up the company for a takeover by a McKesson or someone along those lines. The Board members' backgrounds lend themselves to this possibility.
Randy, Also enjoyed your post. I didn't quite know what to make of your post when I read it, because: (1) I have used more than one formula for inventory turnover, and (2) I wasn't sure if you were doing Q4/Q3, Q4 over last years Q4, or year/year. When I got home, I saw my annual report had arrived, so I assume it was Y/Y? Anyway, I ran my own calculations using 2 methods and saw evidence of slowing inventory turnover. I thought, as Howie did, that this may be related to the Bartels acquisition, but I'm not sure.
Howie, I also noticed the JRJ business (note 28) and also had a negative reaction for the same reason (conflict of interest). I am curious about your reference to McKesson. I hqave no idea who they are, but the JRJ thingie certainly hints at a takeover sutuation.
OK, HIV thing. FDA (which I recently learned means Food and Drink Administration--a Freudian Slip?) wants more data. I am guessing FDA specifically wants more tests of HIV+ blood than was included in the PDA. Larger sample sizes reduce confidence intervals. I don't think it has anything to do with a poor product, but it might have something to do with a marginal specificity performance on a small sample size.
As always, just my almost worthless ($0.02) opinion.