I don't get the 13% stock drop so far today. The earnings and revenue miss appear due to an unusual number of flight cancellations due to weather. The core growth is still there.
Zachs has no credibility. Their analysis is at the first grade level. Goldman is seeing a 40 PE ratio on a stock with maybe 8% EPS growth this year.
I bought back in at $0.85 a few weeks ago. About every year or two they have a big quarter and the stock jumps sometimes as much as double. The balance sheet is weak but strong enough to hold on for several years as I wait for the big quarter. Getting rid of the former CEO is a plus.
Not too far in either direction. Results were mixed with revenues coming up short. That's a big deal because SAM trades at a PE multiple of about 40. You only get a PE ratio that high when you are a high growth company. Growth is slowing fast.
Quite the surge in deposits last quarter and a lot of the new deposits were non-interest bearing. Deposits had previously lagged loans in growth considerably. Bodes well for earnings growth going forward.
If KTCC shoots up after this next earnings report consider rotating to SMTX. It's in the same business and about half the size. Sales have stagnated due to the loss of two large customers (sound familiar?). The new CEO has taken them from losses to an operating profit. Still about two quarters from really taking off. Oh and it's trading at about 10% of revenues.
While I expect the stock price to be down tomorrow I don't expect the decline to be that big. HTCH along with Seagate and Western Digital have already fallen over 25% mostly due to expected lower revenues. It's priced in.
92% of their debt is not bad debt. Getting 50-75% on their portfolio would be disastrous. It would result in a loss of $350 to $700million. Do the math.
While 50 cents on the dollar is laughably low, the portfolio sale would take a lot of future profit away from CONN. Whoever buys the portfolio will want to make a profit plus get additional compensation for the risk. The high loss reserve this quarter was management preparing the portfolio for sale. You saw what it did to earnings. It will do the same thing in the future, it's just too costly.
The sale of the loan portfolio is NOT a good idea. Any one buying that portfolio will want a profit on it plus additional compensation for the risk. CONN will essentially sell away a significant portion of its future profit, as that profit will go to the buyer. This is a panic move. My hope is the offers will be too low for CONN to do it. Now if they sell a relatively small portion of the portfolio to get their debt to equity ratio and interest rate down, that's a different story.
I agree that overall the earnings announcement was a net negative. Sales were up and they guided for increased gross margins. However loss provisions were up. They should have been flat to down. This tells me they are charging off a lot of loans sooner in order to get their delinquencies down. The good news is this is a temporary phenomenon. The average life of their loans is about 8 months, so it all should return to normal by mid-year.