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Cantel Medical Corp. Message Board

  • i3putt2often i3putt2often Oct 12, 2006 8:18 PM Flag

    Earnings Release

    The company reported just $0.06 EPS for the 4th quarter and $0.41 for the year ended July 31st. These are the only relevant numbers since they reflect only continuing operations. The press release obfuscates this poor performance with "reported" numbers that relate to business that is now long gone related to Olympus's termination of Carsen distribution arrangement.

    The stock price now trades at an insane 30x trailing 12m EPS and 50x latest quarter annualized!!!!

    I believe analysts will drop their estimates significantly based on this poor performance data by the middle of next week. Even with their typically rosy outlooks, it is hard to imagine they would believe more than $0.60 which would result in more than a 20% reduction in the average estimate.

    What troubles me most is that it seems neither shareholders nor the analyst community had a clue as to the magnitude of the negative impact the lost business had. Perhaps there is no legal duty to update shareholders but even today's press release seemed misleading with headlines about earnings as opposed to "continuing" earnings.

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    • I would disagree with your negative tone - if you are short, good for you, but not everything is lost here. You forget that the los business was mainly a distribution office and I doubt that anyone would disagree with the fact they got way too much for what it was worth. Short term yes it has a negative impact but in the long run they are better off as they focus on direct sales instead of being just an OEM manuf for Olympus. By the way, if you talk to the company tyou will learn that Olympus has been buying DSDS and MVs in August and September like there is no tomorrow, and there is a significant growth in direct orders at much higher prices than what Olympus pays. So the $800k expense in direct sales efforts in FY06 is paying pretty fast.
      I hope CMN management makes up their mind fast on a new acquisition as you hate to see all that cash just stationed at the bank...

      disclosure: I am not an employee or a paid pumper - just a stockholder that happens to like the company and what they are trying to do based on the new realities.

      • 1 Reply to bexho2000
      • As uncomfortable as it was to see shares I have held for many years suddenly lose 50% of their value, it appears that CMN is going through a painful realignment from a company that derived much of its revenues as a "middleman" to one with a proprietary interest in the products it markets. This process will take some time, unless an acquisition is made that adds immediately to earnings.

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