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.
The huge earnings beat was done on the back of sustainable cost cuts and improved revenue mix. YRCW is now officially out of the woods and able to focus on growth. Improved cash flow will allow it to update its fleet to more cost efficient trucks. This alone will further drive earnings over the next two years. As cash flow improves this will allow a refi of debt to much lower rates. Expect this within the next year. Meanwhile market cap is only about 13% of revenues, way WAY below the peer median which is over 100%. Huge opportunity for stock appreciation.
Earnings and revenues close to estimates and much better than Q1. Guiding for profits to return next quarter and 7% margins by year end. They previously were shooting for 6% margins.
I consider the earnings to be good. Revenues were on target. I get non-GAAP earnings of $0.20 when not excluding share based compensation. Share based comp should always be included. That puts the PE ratio under 15 for a company growing over 20% per year. Where else can you find that?
The earnings were good, but the guidance for the new acquisition Tea Leaves to reduce EBITDA by $3 million is what is probably knocking the stock down.
KTCC is my longest hold. I've had it since 2011. The promise here is always better than the actual results. This earnings report is enough to keep me in.
They lost $0.07 in the quarter, but cash flow is much stronger. This is not a capital intensive business. Depreciation and amortization exceeds capital expenses by about 3 to 1. If you add depreciation and amortization, and back out capital expenses, free cash flow was about $1.8 million. That's $7.2 million annualized, and rising. Enterprise value to EBITDA is extremely low at 4.36. Enterprise value is $46.39 million at a stock price of $6/share and EBITDA is $10.64 million annualized based on this quarters numbers.
Folks, you just don't find stocks with an enterprise value to EBITDA of 4.36!!!
A couple of takeaways from the conference call. Both came at the very end. Net income was reduced by a $1.2 million non-recurring write off. They would have made $500,000. They are almost through the September quarter and it looks good.
"This is the CEO of Netsol Limited. He must suffer from severe mental retardation. Everyone in Pakistan must be standing in line holding a "Woodie" "
It's juvenile comments like this that keeps me mostly on Seeking Alpha these days instead of Yahoo.
Management has now raised enough to get through about 18 months. But they can't stop. If oil prices stay here, the market will be flooded with properties for sale next year and prices will crash. They need to sell all they can now. PWE should be selling at least 20% of its assets, and everything should be available for sale, not just non-core assets. Good job so far, keep it going.
Ms. Via turned CBK around when she arrived a few years ago, so we know she can do it. The market however, is not giving her the benefit of the doubt. I believe this is because so many apparel retailers have either gone under or are just hanging on recently, like Coldwater Creek, Pacific Sunwear, Aeropostale, and Quicksilver. CBK has a strong balance sheet, so they have plenty of time to get back on track.
Another thing that should be mentioned is CBK is in a less competitive category. They sell to middle aged and older women. It's not like Aeropostale which is in a category so competitive that every one is struggling. A few years ago CBK's competitors were Chicos and Coldwater Creek. Coldwater is now gone. Chicos is doing fine. This isn't a market problem, it's a merchandising problem. Merchandising problems can be fixed relatively quickly.
CBK dived from $1.50 to $1.10 after it was removed from the S&P Smallcap 600 index on 9/25/15. This caused forced selling. What we are seeing now is a bounce back to the $1.50 level as value buyers jump in.
I need to add one more reason for the big up day we had. The last two days have been big risk on days. By that I mean that stocks that had been beaten up and left for dead, rallied hard. Take a look at PWE, KEG, ACI.
I recommend anyone interested in this stock look at the Seeking Alpha article on EDUC today. The big beat was due to the company's multi level marketing division exploding. I am generally not a fan of MLM. But getting in on MLM at the beginning can be extremely lucrative.