Yeah, that tax rate is probably wrong. If we were talking about 30 cents vs 40 cents I'd look into it some more, but for this situation I'm already close enough for me.
I used $400K for Ventura from the 10-K Note, and 7055 shares and a 29.7% tax rate from the quarterly numbers in the Q4 2012 press release.
But whether you add 4 cents or 3 cents to the 45 cents reported in Q4 2012, the big picture is that it looks like year over year growth in Q4 2013 will carry earnings far above current consensus estimates.
As far as Value Line, I've never noticed UFPT in there. Is that the small cap edition? But I think consensus estimates are far more important than Value Line estimates, especially for traders - I've never heard a single talking head discussing a company beating Value Line estimates.
Actually they made $0.49/share in last year's Q4, excluding $0.04/share in charges for closing the Ventura facility, as we discussed on this board. So even estimates of $0.50/share for Q4 now look too low to me, while estimates are currently just $0.43/share. That's like a beat and 20% raise.
I'm guessing the big move up was because UFPT soundly beat estimates ($0.41 vs $0.37 estimate) and made people realize that analyst estimates are way too low for the fourth quarter (made $0.45 in Q4 2012, and estimates were a drop to $0.43 in Q4 2013, but with today's earnings report I think estimates will go up to about $0.50).
Another reason for the rise might be the relatively low volume implies strongly held shares. My theory is that about half way through the day when people realized how much higher than estimates the earnings power really is, they wanted to buy, but there were hardly any sellers so the price spiked.
I agree the stock price would not decouple from the trading in Brazil. In the scenario I described, if the earnings and dividend stayed the same in Brazilian real, and in consequence the stock price stayed exactly the same on the Bovespa, well that stock price would be worth only half as many dollars as before. Therefore in order to NOT decouple, the ADR price would be cut in half.
So if the Brazilian real was cut in half against the dollar, you do appreciate that the same earnings and dividends in reals would be worth only half as many dollars? Do you think the ADR trading would ignore that, or drop the price of SBS ADRs to keep the P/E ratio and dividend yield similar to comparable investments?
I think a significant improvement in sales means a very significant improvement in earnings, because of the operating leverage LYTS has. But I agree, what Ready thinks is significant is not clear.
I think the commericalconstruction-driven business improvement I've expected will be a multi-year phenomenom, so doubt most or all of the eventual jump will be seen this quarter. Even though they might have a good quarter because of specific contracts they've started. And I think the shaking of business confidence by the government shutdown/default crisis will cost LYTS CY Q4 orders and sales ("The Tea Party Tax"). And of course what Ready calls substantial is unknown.
So I've taken the profits on my recent extra LYTS investment and am back to my core holding, waiting to see what develops. Maybe a buying opportunity for my late-stage cyclical idea if Ready is exaggerating and maybe a profitable run for my core holdings if Ready isn't exaggerating.
"experiencing strong unit and sales growth quarter-to-date in our lighting business. The environment for lighting products continues to improve, particularly for solid-state LED products. Our graphics business is strengthening, and we look forward to much improved operating results in fiscal 2014. Overall, we expect to see a significant improvement in sales and earnings during the current fiscal year"
Lets how there is some serious negotiation going on about the lowball price. In 2011 I owned a stock, ticker TRCI, which received an unsolicited offer from ticker CCIX for $5.50/share. By the time the negotiations were completed more than 2 months later, TRCI agreed to be bought out by CCIX for $7.20/share. That's more than 30% above the initial offer! Get it, Mr Tunney?
I'm not really disagreeing with anything you say, I just think it is less a function of LYTS itself than the commercial/retail construction industry (who buys light fixtures and signage?), as the whole industry still is in hard times. Take MOLX, which is being taken over announced today, up 30+% today but still priced below what it was in 2007. I saw a McGraw Hill Construction estimate that certain types of commercial construction spending are still 30% lower than in 2007, but are estimated to rise substantially by 2017. And increases in this spending will help LYTS a lot, both sales and margins.
This isn't a company-history-driven play or a specific-new-product play. I'm looking for some late stage cyclicals which haven't started to show growth and to increase in price yet, but I think will. Companies driven by commercial construction spending like LYTS, specialty metal alloys another area, etc.
Plus show me another stock at 3+% yield and 120% BV that is so beaten down because it is so hated by its stockholders! Buy fear and revulsion.