Not sure what to say. This company has the worst IR departmentI have ever seen. Never returns calls or messages. FBR maintained the rating today at Outperform with a $40 price target. And the stock keeps going down. If this compan does not do something the stock will continue to go lower. They just sit back and assume the great value will help it but that's not how it works. CEO needs to do something and stop just resting on his operational skill. Either sell the company, offer an upsized dividend or do some type of borrow or convert to buy back stock. When the analysts support the stock but the company does not, it does not help us investors. Time for action is NOW. Everyone start calling IR to complain.
1. Stock has underperformed the overall market substantially since the March rally started despite strong fundamental performance. Valuation extremely compelling on a PE and Book Value basis given the growth outlook. Very strong management team that is focused on creating stock holder value. Therefore, why is the stock such a dog?
I think the following:
1. The company has become acquisitive and is starting to use stock since they have the book value greater than 1 and the deals are immediately accretive. When a company issues stock, the arbs will short the acquirors stock and keep pressure on it until the deal closes. Merger Arb 101. This is currently happening now. And if they announce another one for stock, it will happen again.
2. When strong growth comes from acquitistions vs organic growth, investors generally discount those earnings a bit more. This company still has organic growth of say 5% to 7%, but to get to 20% takes acquisitions. I think management can pull this off but gain, its just less stable.
3. The stock analyst at Keefe B downgraded the stock in May. That was just as the stock was about to break through to an intermdiate high. He has a beef with the company's acquisition strategy. He may be talking the stock down to his buy side clients. The company needs to do something to please this guy.
All these are keeping pressure on the stock. I don't think a big dividend increase is coming soon since the company is already on an acquisition binge and the rating agencies do not like dividends or stock buy backs so any of these along with more acquisitions is probably not in the cards, although a small divi increase would help the stock.
It's still a great story and it will not take much in the way of positive news to drive this stock well into teh 30s but management needs to pay more attention to what the analysts want since small cap companies really need analysts that support the stock. The volume has gotten so low that it appears everyone has forgotten this company. That means management, although strong operators, are not great at marketing publicy. They need to step up their IR and relations with Wall Street analysts. Listen to the analysts. Otherwise, sell to someone who will. Take your $35 to $40 per share and let someone else run the biz.