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ADTRAN, Inc. Message Board

  • pirates144 pirates144 Jan 18, 2011 11:27 PM Flag

    I'm posting my analysis of the report

    and ADTN as a whole. I actually enjoy research. This took about an hour. Here's what I came up with. Let me know if you think I missed something. These are the facts .......ADTN-$183 mil cash/$48 mil debt ($2/share in cash when you back out the debt). Free cash flow of almost $1/sh. This was the 4th q for ADTN. When they report April it will the 1st q of 2011. Over the next week or so the 16 analysts who cover ADTN will be raising their 2011 earnings and revenue estimates. ADTN is executing very well and taking advantage of the demand in their sector. Not all companies can do that. 2010 earnings for ADTN were $1.79/sh. The current earnings estimate for 2011 is $1.86. That should be raised to about $2.30/sh. 28% higher than 2010. The estimate for 2011 revenue is $672 mil. That will likely go to $740 mil or so. 15% higher than 2010. ADTN doesn't give guidance, but you can see the #'s. It is like a gold rush in this area. Growth of 30% in revenue from this Q last year and income growth of 93%!! The 93% growth in earnings shows the execution down to the bottom line. The S&P trades around 25x earnings, but is only growing at a 13% rate. This is a $50 stock if it just trades at the S&P average. The rate that ADTN is growing should support a 30-35x rate. That puts ADTN at $60-$70. Most companies that are growing at ADTN's rate support a PE of 40-50. That would make this an $80-$100 stock. I don't think it can support that kind of premium, but $60 within a year is a very reasonable expectation. NFLX, AMZN, MELI, AKAM LLNW, SHLD, VOCS, LULU, NVDA, RHT, WYNN & LVS are just a few companies trading at 40-80x earnings. And most of them not growing earnings & revenues like ADTN is. That is just a few I came up with. The actual list would probably be 150-200 companties if you include small, mid, large cap. ADTN will trade above $60 before the year ends. I'm going to enjoy the ride.

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    • Nice report, Chris A big thanks

    • The most relevant question is how many sequential quarters of accelerating growth for both revenues and earnings ADTN will see based on broadband projects arising from the federal stimulus programs as well as private sector demand. The fact that ADTN does not give guidance leaves them room to surprise because analysts do not have enough metrics and datapoints to really know where ADTN's results are going to be on any timeframe.

      • 1 Reply to agassibro03
      • pirates144, nice analysis although where in the world do you get a 25 P/E for the S&P? It's more in the 15 range. I really like ADTN and it's my largest holding. Many stocks recently have dropped on blowout numbers because the numbers were already priced into the stock. That wasn't the case with ADTN last week. As much as I like ADTN for its fundamentals and technicals I like it even better as a possible takeover candidate. I base that on some of the past takeovers among its peers the past 12 months.

    • Also, this is a confirmed Gorilla Pick, which is why I bought it about a month ago.
      Thought briefly about selling this morning, but think I will stay for the ride.
      Obviouslly a lot of short covering going on and a lot more to go. There were 9,000,000 shares short?

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