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Cyanotech Corp. Message Board

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  • wright.tom64 wright.tom64 Nov 10, 2010 8:20 AM Flag

    10 cents a share vs 11

    Whoops, had to reread the announcement. It was also 17 cents compared to 19 cents for the previous 6 months. I know we had one lousy quarter a couple quarters ago, in which, due to termination issues and other items, we reported a loss. Alex can probably fill in the facts from my disjointed post which I am composing after far too little sleep.

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    • A reasonably good quarter.

      Revenues came in at 3.8 mm whereas I noted yesterday I would hope to see $4.0 mm. They said Nutrex sales were up 15% while wholesale sales were lower reflecting lumpiness of orders. Still, it is the second consecutive quarter of lower YoY revenue.

      Gross margin was lower YoY despite the fact that the product mix shifted from lower-margin wholesale sales to higher-margin Nutrex sales. This is somewhat disturbing and runs counter to their claims about the business model.

      Clearly the hiring of teh new CEO is bullish.

      Earnings power remains in the area of $0.30 cents per share per year, it seems.

      So, at $2.40 the stock is at 8.0x trailing 12 month earnings when the severance charge is added back to earnings (it was hopefully a one-time event and thus should not factor into an earnings-based valuation calculation), and the company is virtually debt-free with over $10 million in shareholders equity with an equity market cap of less then $13 million at $2.40.

      The stock is cheap.

      The future catalyst is in next quarter's earnings report. They will need to demonstrate flat or higher revenue YoY and stabilization of the gross profit margin, in my view. If they can do that and come in with eps in the 10-12 cent per share range for the December quarter, then I don;t see what prevents the stock from going back to near $4.


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