I just don't understand why managements (and sometimes shareholders) get so excited when companies make "accretive acquistions". It is so easy to make acquistions accretive if one borrows money and leverages up. This management just doesn't get it: their acquistions may be accretive to earnings but are also dilutive to their p/e ratio. I held the shares when FMK announced the CPG acquistion (and also a smaller acquistion) -- people got excited and bid up the shares (I think $2 or $3 that day). This balance sheet is now unbelievably bad. When I now assume an enterprise value (by looking at EBIT and using a reasonable multiple) and subtract debt, shareholders aren't left with much. FMK shareholders better hope the economy turns around quickly.
My gut feeling is that they will survive. However, the stock has a long way to drop after this quarter and perhaps the next. So next year may still be a good entry point.
A minor concern is, what if the price goes under a buck. Delisting? Would they do a reverse split to stay on the big board?
When they hit 2-3 dollars a share...is a buy out possible? Or do they carry so much debt no one would ever want they at any price? I'm thinking there might be some possible suitors waiting in the wings. If so, they would be smart to let earnings crush this stock before they take over.
My luck, I get caught waiting on the side and not profit buy it. But at least I sold up in the 13 or 14 dollar range and didn't hang on while this baby did a swan dive. And it's not finished diving by any means.
Like I said last time....EARNINGS ARE COMING. And if you thought the drop from 14 to 6 was ugly. Just wait.