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Axion International Holdings, Inc. Message Board

  • pi3point14159 pi3point14159 Jul 20, 1998 12:32 PM Flag

    What's the Happeings here?

    Bottom fell out today.........what's going on?

    TL, BBGeld, Gry, Mikebert----------Hey guys, what's your take?

    3.14159

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    • Using GryCrayon's figure of $31.5 million in debt
      payments, 8% interest, and 30% tax rate one can calculate a
      bottom line impact of $1.76 million on net income.
      Assuming roughly $6.1 million/year in net income at
      present and a 30% internal growth rate, we should expect
      net income of about $7.9 million from continuing
      operations over the next 4 quarters. Adding these together
      gives $9.66 million in net income over the next 4
      quarters. After the sale of the new shares there should be
      roughly 8 million shares, so EPS over the next 4 quarters
      would be about $1.20. In the absence of the debt
      payoff, we would have EPS of 7.9/6.25 =
      $1.26.

      This simplistic analysis suggests that the impact of
      the stock issue on EPS assuming no further
      acquisitions would be slightly negative (~5%).

      This
      negative impact amounts to about $375,000, or $535,000
      before taxes. This earnings shortfall could be made up
      by an investment of $10 million in T-bills. Provided
      ANLT can raise at least $41.5 million by the stock
      issue, use 31.5 million to pay down debt and invest the
      rest in T-bills, the impact on EPS of the stock issue
      would be nil.

      Thus, assuming a 10% cost (I
      should expect it's less than this), if ANLT can sell the
      1.75 million shares at an average price of 26 or more,
      there should be no EPS dilution at all. Of course, ANLT
      will eventually put the extra assets to work at
      something more profitable than T-bills (e.g.. more
      acquisitions), but it is nice to know that even in the short
      term the impact of these extra shares should be
      neutral, or even slightly positive on EPS.

    • ....lets hope they are good!

    • Stock should end the year somewhere between 35-40
      and next year end between 45-50, if that's not high
      enough or fast enough for some of you, then please
      reconsider.
      This is a 3-5 year hold and a very rewarding hold
      based on past performance, there is no guarantee to any
      of this, and the fluctuations over a 3-5 year period
      would probably drive non-investors crazy, this has
      proven to be the strongest co., in an emerging industry,
      whether or not it continues to be so, is where the
      investing comes in.

    • Is ANLT going out of business? I seriously doubt
      it. Were they really going to report blow out
      earnings for the quarter? I seriously doubt it. Do they
      still have a very favorable outlook for the longer
      term? I seriously believe they do. Is it possible that
      the stock offering needs to priced more attractively
      than the wild numbers that were being thrown around
      here a short while ago? I seriously believe that too.
      Are too many of you in this stock to try and
      capitalize on every wiggle and squiggle based on hope, hype
      and enthusiasm? It sure looks like that. Can I be
      expected to apply that technique to my investment
      philosophy and expect to enjoy real capital appreciation? No
      way Jose.

      It's about time that many of you
      make a real effort to understand what this company and
      its industry are really about and either aclimate
      yourself to the fact that it makes very volatile price
      swings based either on perceived or real changes in near
      term fundemental performance. A company such as ANLT
      which reports on a "percentage of completion"
      accounting basis is subject to wide swings in quarter to
      quarter reporting and trying to use past performance as a
      basis for comparison can lead to severe frustration.


      An educated guess on my part leads me to feel that
      the sequential quarterly and year to year comparisons
      will fall short of what some may have taken as a
      shoo-in for dynamic sales and net income growth. This of
      course tends to drive the momentum player of the track
      very quickly. Time for the release of real news is at
      hand and that's when I may make any change in my
      current thinking about calling it a day in this stock.

      • 1 Reply to TLWatson5906
      • I wanted to respond to your comment about
        'percentage of completion accounting'. In a service industry
        when a large number of employees are working on
        projects such as consulting or data conversion and when a
        large backlog is present then the percentage of
        completion accounting model should provide consistent growth
        in revenues as well as earnings. If revenues as well
        as earnings are not growing in a smooth consistent
        manner then it is likely that management is doing a poor
        job of estimating the overall expected margins on the
        projects. If the management cannot do an effective job of
        estimating these margins then it is impossible for the
        company to reliable report earnings and hence for the
        analysts to value the company. It is too early to tell
        what is really going on with this company because the
        company is growing so rapidly (that is not in dispute)
        and during a growth phase in this type of industry it
        is easy to hide a lot of 'sins'. I would say that if
        the management team at this company is experienced,
        realiable and trustworthy then we shouldn't have much of a
        problem, but if this is their first venture into the
        public arena, then these guys may be tempted by the
        short term and be a little too optimistic about margins
        and aggressive about revenues. They can afford to be
        pretty aggressive for a pretty long time but the longer
        it continues the harder they will fall when the
        growth levels off. Hopefully they haven't been too
        optimistic in which case I think this company is a can't
        miss investment. But if their revenues and earnings
        are not consistent from quarter to quarter I would
        bet that this company doesn't have its house in order
        and its going to be a painful fall at some point in
        the future.

 
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