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Kimball International, Inc. Message Board

  • Papi_Chulo_32304 Papi_Chulo_32304 Feb 3, 2012 8:15 AM Flag

    Earnings and Balance Sheet

    Kimball increased it's profit despite a decrease in revenue due to Bayer. This was a result of an increase in margins (and cost-cutting).

    Excluding one-time items, profit was 11 cents a share. It's not a good assumption, but if we then extrapolate 44 cents per year in earnings, you get a P/E of ~14. This comes with a 3.1% yield and a company that is trading 37% below tangible book value.

    While the loss of Bayer as a customer was a severe blow, it is promising that KBALB is growing it's business excluding the effect of Bayer.

    This is not a growth story. This is a total value play but an unusual one at best. Even if P/E were 100 (but still positive earnings) a 37% discount to tangible book value is not sustainable.

    I would love to hear what others think. I'm long due to valuation and balance sheet, and today's earnings announcement was a big positive from my perspective. I probably won't be adding too much to my position unless we get back down below $5.50. I wouldn't sell below $10 (tangible book value is about $9.75) so I seriously doubt I'll be selling anytime soon.

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    • I will be up front in admitting that I am not a big fan of the current company.

      With the said, if you see value that I don't then gobble up as many shares as you can. If just over 1% net profits on sales is good then you have a buy. If just under 1% net return on equity is good then you have a buy. (The company had a 24% return on equity goal back in the early 1980's per an inside family member. That member apologized to me when they missed that target the first time.) When the president admits to being "guarded" about their future when he has deceived us for years that things are looking up when they never did, you got a buy. When they are still blaming most of their problems on Bayer contract expiring when their sales should have had more business than Bayer ready to take its place, you have a buy. When they talk about the largest furniture contract in company history and they talk about pricing pressure they must have bid the contract too low, then you have a buy.

      I am positively surprised by the profits compared to what I was estimating. More than double. But what is an extra $1.5M? This company used to make $55,000,000 in a year on lower sales. That is before they bought and closed a couple dozen factories at a cost of hundreds of millions.

      Kimball still lacks vision. Talk to the customers and employees and you will not be as excited about this company.

      My long-term predictions that I hope I am 100% wrong. Will be using the line of credit in 3-5 years. Will be gone in 15 years. They are the Eastman Kodak of furniture. Once a great company but didn't know what to do with their talent so they stumbled all over themselves until they failed.

      I too wish to be ripped apart by my 2 cents of opinion.

      • 1 Reply to longduckdong1960
      • Excellent points longduck. That is certainly the longer-term perspective, but the company was also worth a lot more in those days. It just depends on what you want to pay for growth (or lack thereof). The question with KBALB is do you want to pay $250 for a company worth $370 (tangible book value) but is hardly growing at all? Or would you rather pay $85 for a company worth $6 but is growing at a decent pace like Amazon? By the way, you mention their credit line but KBALB has less than 300K in debt but more than 31M in cash. Unless they start losing 2M a year I don't see how they will be gone in 15 years. Eastman had a transformational digital age problem, but I just don't see anything like that here with KBALB.

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