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Goldfield Corp. Message Board

  • dalton880 dalton880 Apr 4, 2013 11:35 PM Flag

    Why GV dropped to $3

    While I believve GV has huge potential, and that the stock is worth more than $3, I can grasp why the stock has backtracked from $5.60 to $3. I believe that when the stock was rallying from $2 to $5.60, there was the hope that GV would report another big contract in the Dec qtr earnings report. However savvy investors know that without a CREZ($52M) type contract, that GV(at present) would have to increase regular business by around $10M/qtr to sustain $.17-$.20/qtr in EPS. However important to note is, IF GV got another $50M contract, it would be worth much more than $5.60.

    I mean, the Dec qtr proved that GV has great potential, and now has enough equipment and manpower to post $25M+/qtr in revenues, and around $.20/qtr. Now IF GV could keep up $25-$26M/qtr, what would they be worth ? Well with a run rate of $.75-$.80 and super growth, I'd say $12-$15. However at present, this is not the case.

    So what is the stock worth now ? Well a few important things to note are, GV is in a very strong sector, which is at the beginning of a growth cycle in electrical construction which could last for years. Also to address the sequential declines in overall backlog the last few qtrs, I would point out that GV has actually increased their backlog outside their one long term CREZ contract, from $12M at Dec 31, 2011 to $17M as of Dec 31, 2012. Also impressive, was that although the same amount of CREZ work was completed in the Sept and Dec qtrs, revenues outside CREZ rose from $8.4M in the Sept qtr to $14.5M in the Dec qtr. So what does this mean ?

    It means that GV is growing their revenues outside CREZ, plus growing their backlog outside CREZ, and if this keeps up, they could in my opinion do enough more business outside any long term contracts in 2013 to be posting the same $.17 they posted in the Dec qtr, 2012, or even more. Plus of course, should they actually get some larger long term contracts, that would only add to all this.

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    • Hello Dalton, I don't see the numbers your expecting. According to the last file the company recorded 41 million in backlog with 23 million tied to the Crez project. That leaves 18 million for other work. GV will need at least 60 million just to get a 100 million with no backlog . Gv would have to get at least 100 million in back log just to get were they were before the stock collapse with a 41 million back log for end of 13 That's what GV would nedd to get to 25 million a qtr.. Without a big contract I don't see that happening. It will be difficult unless they get a big contract or mulitple smaller contracts to sustain the growth for higher stock price.

      • 1 Reply to gagielom
      • gagielom, GV doesn't need a huge backlog to sustain making $20M+/qtr in revenues and $.15+/qtr EPS. Most of GVs business is from short term work, which gets done during the qtr, and this business is growing fast. The fact that they grew short term backlog by $5M in 2012, while still posting $14.5M revenues in the Dec qtr outside CREZ, shows demand for short term electrical construction(transmission line) work is rising. My feeling is, we will continue to see demand ramp up in 2013, and even without CREZ, GV will start posting $20M+/qtr. Also the new equipment purchases, while CREZ is ending, speaks volumes about demand going forward.

    • price drop is profit taking... most people were sitting on a 50 pct gain, minimum. last week a lot of high mo stocks had a pullback. traders latched on for the run from 3 to 550. started bailing hard at the first sign of trouble with price... agree with points above re medium term. i was on of the sideline folks who missed the run up and was looking to enter. i do hope it stays above 3. need new buyers....a contract announcement would break this open.

    • Interesting to note the change in volume from the average daily volume and the corresponding pricing these past 2 trading days.........

    • Excellent analysis. Core Business is doing great in a sector that is growing strong. Technically speaking I had noticed volume has been petering out on these down days for GV. Today for instance in a very bad market overall, larger blocks than selling blocks have arrived on the seen for GV. Let's see if large up side vol compared to down side begins to make a trend and sentiment is saying; this is a bottom..

    • Dalton, thanks for sharing your insightful analysis of GV backlog and revenues. Perhaps the shorters also know this and drove the price down to get a low entry point. This makes sense given that this is not a broken company in a broken sector....quite the opposite. I will be watching for when the downward manipulation is over. I took a hit to stop the bleeding but plan to get back in as technicals right now are very weak.

 
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2.72+0.03(+1.12%)Sep 28 4:02 PMEDT