agreed. That's why I factored in a 20% dilution in my 2011 outlook. Even then we still come out ahead. Just crunch # and you'll see. The meat market in China is huge and so is demand for SKBI's products. They just need more capital to face that demand and grow. As long as eps growth is not substantially impaired, it's fine with me. I like companies with solid prospects and good value. SKBI is one of them IMO.
Market seems to like the S1 withdrawal. SKBI among Top 10 % gainers on Nasdaq today albeit on very light volume:
Fairly muted response so far. Only 22,000 shares traded. Was in the 8s before the S-1 was issued.
If SKBI finances a $10M expansion with cash and gets a 30% return in 2011, that's an additional $.42 in eps.
If they can hold off dilution until next year, I think they will earn $1.88-1.9/sh this year easily. This is based on rev guidance of 45.5-47.5M and same net margin as Q1 (=29%), which seems low for the year since they have been able to increase gross margin in Q1 considerably compared to last year.
I also believe that the stock can weather a 20% dilution next year while maintaining eps growth at 30%+ with the vaccine plant coming online later this year. Thus with the S1 withdrawn, the stock presents a tremendous upside at current price for the next 2 years. I am adding.
If they can acquire someone without dilution you will see a $10+ stock quickly because with a little more net income then I am projecting you will have north of $2 per share profit. Just a 7 PE puts you at $14 (probably deserves a lot higher then that). Hopefully this will happen and they can raise money at a more reasonable price and continue to grow.
Even without an acquisition they are growing at over 30%(don't need to raise money to continue this)! Now since they just told us they care about shareholders this one deserves a higher PE(closer to 10 IMO). I will try and add Monday at $7 but it will probably open up north of that. YOU NEVER SHORT A COMPANY WITH ONLY 7 MILLION SHARES!! I have followed this one for a while and some who have not been here will be amazed how quickly this can rise when sellers disappear!
Of coarse if the general market tanks it won't matter but my opinion of our management team went up a lot.
Thats great, I know 3 guys who are short and out having a good time at happy hour right now. It's great they did it on a friday AH so the news will spread all weekend. Should see news monday morn. Shorty is ufcked!