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ATRION Corp. Message Board

  • stillwater9999 stillwater9999 Mar 11, 2013 5:14 PM Flag


    Clearly the fastest growing segment is now fluid flow. (now 41% of revenues, 8.4% y/y growth).

    31% y/y increase in R&D. Knowing mgt. here they must have some specific goal/products in mind.


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    • I love the Atrion 10-K, always simple and straightforward!

      I am a little more bullish on 2013 EPS than AA, though as always, you can't really predict earnings in small companies with very few outstanding shares with any accuracy. I will guess 13.50 for the year.

      A couple of data points-- ophthalmic revenues did rise during the year back to $4.5 mm in the 4th quarter after the dropoff in Q1 2012. Traditionally, the business did $20mm in sales per year, so anything close to that would be very positive in 2013.

      The company is regularly in the market to repurchase stock, but it's darned near impossible because of restrictions as they were only able to get about 3,000 shares in 2 months. In general, they will not be buying in the 1st month of each quarter as you can see from the filings because of the blackout rules. If you know anyone with a block of shares for sale, the company can buy blocks without restrictions.

      So at the end of 2013, assuming no special dividends and minimal stock repurchases, Atrion should have about $33 per share in cash and $13 per share in EPS [excluding the 50 cps in interest income] So you are paying $167, or a bit less than 13 times earnings. I think as the numbers roll through, confidence will return and the stock will be nicely higher by year end. As always, do your own homework!!

      Personally, I would love to see them borrow money to do a significant Dutch auction or tender offer. As a quick back of the envelope calculation, if they bought 500,000 shares at $220, using $40mm of cash and borrowing $70 mm at 3%, it would increase earnings 20-25% right away, and they would pay down the debt in only 3-4 years. Check my math, as I am too stupid to get this right and too lazy to doublecheck the numbers. I place the odds on this happening as virtually zero, but it was an entertaining exercise.

      Best regards to all!

      Sentiment: Strong Buy

      • 1 Reply to microcapguru
      • Thanks for the shout-out and the estimate guru.
        You're really the guru on this board in my mind.
        This name has been off my radar for a while as I thought
        it would be dead money for some time.
        It still has a while to go, but it already is mid-March, so in
        less than 6 months forward-thinking analysts already will be
        focusing on 2014 earnings.

        I think the impact of the medical device tax makes a 2013 estimate
        really hard because the dynamics of management/pricing/customer demand
        is not predictable from prior observation.

        However, what I will say is that if Guru's number is close and the company
        gains the appearance of being back on a growth track of 5-8% revenue growth
        and widening margins, then a 2014 estimate of $15 makes this more than a
        $197 stock 9as I write).

        Dutch tender is an interesting idea, and the company has a history of having done a
        few in the (increasing distant) past. Your example would retire 25% of the shares,
        and the $70 million at 3% is less than $2 million a year in interest after taxes, so a
        20-25% accretion to e.p.s. sounds right on target.

        So, guru, Terps or Hoyas?


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