Buypanic,...thank you for providing me with the phone number of the Conference Call. I agree with your post "Flat earnings worst case scenario". However using cash to buy the stock would show a lack of managerial talent, because with out cash there will be no new contracts, since sources of funds for construction are becoming more expensive and harder to obtain. Personally I think the stock began to be accumulated some time around December 13th. 98' and smart institutions will view this as a temporary set back.
I'm also holding a core position. I was fortunate that I doubled down at $10, and when I was listening to the call right after the first sentence I sold half my position. Basically I sold the block I bought at $10 for a small profit but am very much under water on my original purchase which I will hold.
From the conference call, and a long conversation with investor relations afterwards, my feeling is that the $1.00 is the worst case. Its what they are using for budgeting purposes but its not the real target.
There is a worst case, a most likely case, and a best case. The $1.00 is the worst case. There is a lot of upside. But its unlikely they will get back to the 20% growth for 2000. I'm estimating high single digit growth for 2000.
I think you will see the analysts estimates for 2000 between $1.05 and $1.10 after they make the revisions from the CC.
I am resigned to very little change in the stock price over the next 6 months. But certain events could change the outlook quickly so I will hold my original position.
Anyone with any sizable investment in WHC was listening to the CC. So if they were going to sell they would have already. Everything is built into the price at this point, I think.
But there are areas they need to improve in the operations of certain facilities and they need to be sucessful in getting some revisions on the NM contracts. They also need to be more conservative in the bidding process on future projects to be sure they will earn an adequate return and that all contingency risks are considered. In other words, they can't continue to bid on projects assuming everything will go perfect. They also need to do a better job in controlling the growth in g&a overhead costs. And they need to be sure they are getting a fair deal in the financial arrangements they have with their related parties, both with the parent company and with the REIT. There is a lot of details in that last one, but I'll just leave it at that. And finally they need to use some of their cash to buy back stock.
The challenges are not overwhelming and I think they will be ultimately sucessfull, but my patience is limited.
Projected earnings of 0.28 vs 0.22 for this quarter, next quarter earnings where reduced by .03 from the discontinuation of the Austin, Texas contract. But is possible that this quarter may be reduced .03 cents rather than next at any rate im looking at least for 0.25 vs 0.22 for the quarter. And 1.20+ for the year 2000.