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CE Franklin Ltd. (CFK) Message Board

  • Ronharv Ronharv Oct 31, 2005 11:17 AM Flag

    Earnings disappointment

    I've been as bullish about Franklin as I've been for any stock in quite a while. But considering the number of open rigs, I expected Q3 earnings that rivaled Q1 and Q4 guidance that exceeded Q1. Not the case at all, though. So I sold between 10.20 and the low 11's. While I made my largest profit this year(certainly my wife is happy), I had greedily hoped for a lot more. If I were a longer-term player, I'd have stuck with CFK, but I'm not. Nevertheless, I'll continue to watch it, as the stock is volatile and could do anything between 8 and 12 without any particular reason. So if I can replicate my avg. buy-in of around 8 again, I'll be jumping back. Meanwhile, good luck to all.

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    • Re SVA, with my first buy-in I got awfully lucky and made 10K. I bought again on Thurs. and sold Fri. for almost 3K more. Oddest of all, though, was a trade in EXM (Excel Maritime, a co. I've traded profitably a few times). Toward Thursday's close there seemed to be panic selling in anticipation of the after-market earnings report. So at 3:58 pm I apprehensively bought 5K in shares for 14.63, saw a reasonably decent earnings announcement 10 minutes later, and then was able to sell out for 15.95 in extended-day trading because some people really misinterpreted the significance of a one-time sale of two ships. Moreover, I bought loads of GENCO (GSTL) earlier in the week for my IRA accounts because of its huge dividend and watched that rise smartly also after excellent earnings. Apologies if I responded with more than you bargained for, but it's been a helluva week. Re CFK, I'm not at all averse to buying back in, but I'm going to hold off for a while as I think the market is due for some rough sledding that'll cause CFK to have a bumpy ride also. If I'm right, I'll have a bargain; if I'm wrong, it sure won't be the first time. After all, I sincerely believed that Franklin would have earnings fireworks when it didn't. I made good money but am still disappointed in both CFK and my overconfidence.

    • Hi Ronharv,
      How are you doing with SVA? Could be a good time to come back to CFK for a lift.

    • Ron I'm surprised, I thought you were a "die heart" long???
      So now $8's a good entry... you might want to use a little TA :)

      • 1 Reply to stock_finder60
      • I'm not a diehard anything when it comes to the stock market. What I try to do is have a plan for a short- to intermediate-term trade. In CFK's case I wanted earnings to meet my expectations (hopes may be a better word). Had Q3 produced the way I thought it would, I'd have then aimed for a sell between 14 & 15, which I thought would take a month or three. However, I have advised a couple of relatives not to sell if they plan to hold for more than a year. And regarding TA, I made $60K without it, so I'm not exactly suffering for its lack in my trading life. In the meantime, I bought 20K of SVA at a squidgen below 5 at what seems to be a panic blowoff. I'm not necessarily recommending it, but it's a pretty interesting stock both for what it does and its trading action.

    • Ronharv, I sure can't fault you for taking a profit (remembering the old adage, one will never go broke taking a profit), but I think you are taking your money off the table too soon. My first reaction to the earnings announcement was one of mild disappointment with the 22c diluted eps #. I had earlier predicted on this board they would show 24c, but I have since looked it over in more detail and would note the following:

      *Diluted share count is up based on options that have come into the money with the recent runup in the S/P. Using diluted share count from a year ago, the company would have actually earned 24c.

      *The company announced in the CC that they opened 3 new stores last quarter. That is nearly a 10% increase in their total number of stores. No doubt it also depressed margins somewhat in the short term as it takes money, time and effort to get the new stores up and running. It does however lay the base for even higher sales and profits in future quarters. The wet summer in Alberta also impacted margins somewhat.

      *As we hear more and more rumblings from Capitol Hill about a windfall profits tax on oil company profits unless they are invested in new exploration this will only increase the demand for CFK's products. Even more important are investors' perceptions that OG service stocks are a great place to be invested if that were to occur.

      I bought CFK looking at it as a long term investment (long term meaning more than one year to reduce my personal income taxes on my profits here). I see nothing to change my positive outlook on CFK going forward. At any rate, congrats on your profits but keep an eye on it- Personally, I think CFK will easily double again over the next year.

      • 1 Reply to Cliffvb
      • I also feel that CFK should do very well medium term (6 months - 1 year+). I am actually a bit surprised at the valuation of this company. It currently trades below P/E 15, counting last four quarters. US companies in the same sector with similar growth rates trade above 20. The general sentiment is that Canadian dollar is likely, if anything, to appreicate relative to USD. Why the discount? Any ideas?
        I can only think of relative obscurity - not even a single analyst a few months ago. With more exposure there an additional upside here that I do not see in other oil/gas companies.

    • Here is a typical example why CFK tanked after earning.
      !. Too much hype.
      2. Too much pin-up profit to be taken after unrealistic anticipation
      3. Low flow means volatility.
      Should I say more.

 

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