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AMCOL International Corporation Message Board

  • steve_382 steve_382 Apr 19, 2007 11:28 AM Flag

    Q1 Earnings Fri, Apr. 20 CC at 11:00 AM

    Any guesses? Looks like the market is dropping the price a little going into the earnings report. We were at a double top recently that would allow quite a price drop on a disappointmnet, but could also allow a decent run up on a good report. I'll be long through the report and then evaluate.

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    • That would explain the Q1'06 positive surprise, and makes Q1'07 a tough YOY quarter for a simple comparison.

    • CC pointed out they had 5 mil. of hurricane related business in 06, more than half of which was in 1st qtr.

    • The impact of Oilfield Services GSA was significant. Up 122% on sales and GP increases of 47% and 55%. If Oilfield Services GSA had tracked sales and GP growth, an extra 1.631 million would have been added to OP. At the Q1 tax rate of 26% that would have put YOY Q1 net at +24% for ACO as a whole which would have been just above consensus at 22.6%, or just below at 18.9% without the currency exchange tail wind. Hopefully this should be correctable going forward.

      I'm not sure what to make of the reported drop-off in well testing and filtration services late in Q1. U.S. rig counts continued to grow through March. Perhaps they are losing market share?

      One thing not mentioned in the 8-K was the U.S. briquetting business. This should be an area of growth for metalcasting since they have smaller market share here, whereas bentonite performance is likely tied more closely to the overall industry as I beleive ACO already holds major market share.

    • I wouldn't lose any sleep over that purchase either.
      As far as acres planted, the mix will change but not enough to spark any increased transport requirements in and of itself.
      Farmers are now carving the fat hog with a 70-100% increase in the price they receive for corn plus all they get from sticking their hands in our pockets from subsidies.
      They WILL be buying lots of bigger, more expensive equipment and trucks as a result.
      Ethanol is a local business as ethanol cannot be pipelined. I see ADM has large numbers of rail tankers and WILL probably need many more to get Ethanol to market since rail,truck and barge are the only ways to move it.
      I think ethanol will be a shorter term phenomenon than most think because it is not as enviro friendly as hoped(in same areas it is far worse than what is used now)and it is running up food costs dramatically. In Mexico there have been tortilla riots since the price of corn has skyrocketed.
      Since degenerates run most Latin countries the people are going hungry while the bigs stuff their pockets with the oil and corn profits.
      In short, several years hence we shall see ethanol as a disaster.

    • I think you're going to like $25.25. I'm in today as well.

    • I am wondering if US metalcasting might not turn out better than they expect for the year. Seems like Deere, Cat, and some others are doing well now. If we are really planting all available acreage in corn for ethanol, that should translate into large equipment purchases at some point. All that grain will have to be transported also.

      Who knows when the auto market will pick up, but if we don't really enter a recession auto sales should recover.

      FWIW, I bought some shares today at $25.25. Hard to say if that was a good entry point or not.

    • The dollar is in a free fall and I do not expect it to rally enough in the second quarter to hurt their results. Their business does seem to be seasonal but I was very surprised that the oil/gas part of the company turned down. Me thinks that competition might be hurting them. Otherewise, with the overall stock market very strong, I feel the stock will rally back up in the coming days.

    • Positives: eps improvement despite downturn in metalcasting industry; 2nd and 3rd quarters give more weight to environmental which is doing well; some of costs are amortization of intangibles which carry less weight in hi eps qtr (2nd and 3rd). JV income continues to increase nicely

      Negatives: I didn't realize overseas earnings seem to be a small part of the petroleum/gas segment; much of eps improvement due to acquisitions and also they had a tailwind from currency; balance sheet has deteriorated, so likely a slow down in acquisitions (they actually made a small divestiture not brought up, of UK business which provides dessicants for packages); while I was worried about US truck market, still it would have been nice if management had pointed out some of the negatives ahead of time.

      Comments/additions appreciated.

    • I'm not sure annualizing a single quarter to get a PE is the best way to look at ACO. Some of the ACO businesses are seasonal. The second and third quarters are usially stronger. If you look at a ttm PE we're below 17.

    • How can you say we are at a PE of 17? PE is currently above 18.8 with annualized earnings of 0.35 * 4 = $1.4 EPS...
      26.39 / 1.4 = PE 18.85

      We will need to get to $24-ish to get to a PE of 17... but I think we are a buy at 26.

      And who's to say what the PE really is??? The company doesn't give guidance, and the analysts blew it...

      I dunno... I am probably going to pull the trigger lightly on some buying Thursday next week, once this stock cool down some.

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