Even at low/no growth this seems like a good value. Low debt, paying a dividend makesme feel good about management etc.
Are competiors eating into their market or is this market disappearing ? As a long-term investor I'm not worried about economic slowdown/short-term earnings etc. but I am worried about a disappearing business. What do you experts think?
The "catalyst" for a rise to $20 would be earnings. Work out net present value for yourself (Hint: bond wonks are paying 25 times the annual interest on 10-year treasuries right now. so that's the zero-risk price/earnings ratio. Stocks are not zero-risk, so you pay considerably less than 25 times earnings (unless you bought NLS at $40 -- 25 times earnings -- when treasuries were 5% -- 20 times interest. I can't understand buying a business at 25 times earnings any more than I can understand selling it at 5 times.)
We might have to wait a year or two, but earnings and return-on-equity powerhouses that are loaded with cash don't just disappear after a bad year (or even two or three) unless they start wasting money on something dumb. All i see is retrenchment in advertising due to war-driven tv spot rates.
The only scenario that justifies current prices is permanent business disaster. I see massive short interest and stockholder panic, and it could be a bad year for the actual business as well. In my opinion that's not quite the same as total collapse.
Um. This is all market bs. For one thing, nobody has reported a "bad quarter". Look at the Q4 results, don't take the board's word for it. It was a near miss. Now they HAVE shared a "bad forecast", and that is not a good thing.
But if they report a "bad quarter" then the price will fall again. I am saving my next batch of cash to buy even more shares if that happens. I am happy to take the risk at 4 times trailing earnings (or even 6 times!).
The "value trap" rhetoric ... well, you have to decide whether that is good advice or just a desperate oxymoron.
People have shorted the stock massively, to roughly 30% of the float at last report. With 30% extra shares sold, of course supply and demand have driven the price very low.
Some of the more excitable people on the board have insisted that shorting this stock is "free money" & they will never have to cover. One way they get there is by suggesting that the long-term future earning trend should be found by drawing a downward-sloping line through profits of the last two quarters, ignoring the previous 18 quarters of >50% annual uptrend.
As you've seen, some folks view (a) Bowflex's prominence (60% of revenues) and (b) a patent expiration next April as devastating to the company. On paper, the race to market Bowflex clones opens up at that point -- with NLS of course initially leading the field at 100% market share. They could very well lose some of that 100%.