Yahoo notified me about the split and adjusted my portfolio to show it.....showing price after split as something like $25??? Of course that's not the first time they made a mistake, but this is really jumping the gun!
Add that production costs (material cost for castings I believe) are going up in FY2005 and that generator sales are down because no event like last years grid failure. Result, projections for 2005 don't match the growth in 2004. On the other side they IMO have taken a very conservative view on the integration of Simplicity projecting a loss of $1.0 million in 2005. This assumes no synergies from savings in overhead that they acknowledge exist. Also, savings from cheaper manufacturing (sourcing off shore) are not assumed. They also do not assume any benefit from being able to sell other products to Simplicity's 9000 dealers. All very conservative.
On the other hand they project net income increasing to $160 million, up over 17%. Per share earnings up from a range of 14 to 18%. That is a p/e of about 11 on current price. A cheap stock.
Here's a portion of the phone conference that they had last week.
<Revenues in the first quarter of fiscal 2005 are projected to be greater than last year by about approximately $50 million. However, net income is forecast to be similar to that experienced in fiscal 2004. Simplicity first-quarter sales and net loss are forecasted to be approximately $72 million and $1 million, respectively. So they represent the majority of the change for the prior year. Power-products segment sales is forecasted lower because of lower generator volume in the first quarter.
On the Simplicity acquisition:
BRENN: They basically themselves had indicated they thought they could grow around 3% for this year. And they look for about 7 -- probably around 7% -- in future years. I think that is representative of them taking -- they have done a couple of acquisitions. We are going to spend the year consolidating them, integrating them.>
I don't know about you but the Simplicity aquisition doesn't sound like it was as profitable as they thought. I think that they might have relied on their former auditors for guidence. Their projections didn't impress the market.
Notice that the entire market is at a yearly low. BGG is not close. The economy is not growing as fast as it was, so BGG growth is not projected to be as fast. IMO, that is why stock is down. IT was and is how even cheaper and a good buy. I bought more and will add shares if it falls further.
I'm a little concerned, actually, about what we don't know. I didn't see anything in the release the suggested a 10%+ was merited, so there must be something out there we don't know.
Even if this cat bounces, it may still be dead!
I sold half my position at $85 when I thought it was too rich, but kept the other half just in case. I'm, like you, considering getting back in again, but am leary. Any speculation? Something in the aquired company that isn't as rosy as thought?