I would never have stayed in the stock. I mean the only thing keeping me hanging in here is the belief that management has had enough experience in electrical construction to know business is strong enough and with high enough margins to justify all the buildout they've been doing. I mean this company has made moves lately that will either make or break them in my view. All the equipment purchases, the aquisition of C&C, and the slew of new workers hired, is a historic move for GV.
How many here think GV will make $.05+/qtr this year yet ? How many here think GV will fail altogether in their quest to break into the booming Texas electrical construction business ?
The stock is the same price now as before the CEO made such glowing comments in the letter to shareholders. How in the world investors can totally write off comments that suggest business is booming is beyond me.
Well maybe I'm naive, but I believe the CEO when he says MSAs will grow huge going forward. This company has been around for over 100 years, so hard to believe investors have so much distrust. The last few quarters had mishaps and such as they finished up STEC & aquired C&C, but this company is growing fast in a very lucrative electrical construction sector in Texas.
My only concern is margins. However even if they stay small at 16%, I still believe the stock sees $3 over the coming months. Revenues will likely see $25M/qtr from here on out, and if the MSA orders pour in like the CEO says, then $30M+/qtr all during 2015. Rignt now it's about revenue growth mainly, and that growth demands higher than a 10 PE going forward IMO. That's why even with $.05/qtr, GV should see $3 if revenue growth continues to be strong, and backlog continues to grow. No brainer below $2 IMO,
Lets look at a negative case scenerio for margins. Lets say that margins stink going forward at 16%. However lets say that backog ramps to $150M by the Sept qtr. I will have to assume GV could easily do $28M/qtr in that case at a minimum. So how much would GV post if they did $28M/qtr with 16% margins ? After crunching the numbers, using a 37% tax rate, they woud post approx $.045 EPS. Annualy that would mean $.18.
Thing is, with the backlog ramping up so strong by mutiple folds over the current backlog, I suspect a 10 PE going forward would be way too low. I would give a conservative 15 PE going forward for that kind of growth, putting the price target at $2.70. Now mind you, this is a pretty bad case scenrio on margins, so I believe this to be a worst case scenrio assuming backlog ramps significantly.
That is my only concern. Hopefully the 15% Mar qtr margins will prove to be the exception, not the rule. I can live with 18%, but hopefuly they'll be more like 20%.
freeze, I agree. However I must say it's frustrating not hearning of a major contract($50M+) already after the CEOs comments of what's transpired since Mar 31.
fdk. we didn't discuss a price. I would be willing to put 20K out there for now at $1.95 if you're interested today. I've decided not to sell anymore below $2. This has nothing to do with my core position.
fdk- I can sell you 50K shares. I mean if you bought in the open market, you'de yank the price up well over $2. So make me an offer.
Serendipity, when would the stock be worth a shot in your opinion ? I mean we could very well see the $1.60s or even $1.50s very soon.
EPS no matter how large their backlog, or how much in revenues they do per quarter. This is irrational in my opinion, especially after CEO remarks only a few weeks ago. I for one have been adding in the $1.60s, $1.70s, and $1.80s.
dt, but what we do know is, the CEO made that statement based on MSAs awarded(or recommended for award) since Mar 31. Therefore it's my opinion that number one, business is robust, and number two, that GV has either already recieved, or expects to recieve a large contract imminently. I for one don't want to be out of this stock the day a $50M+ contract is announced.
I mean if the company were a fly by night or something, I'd say that the recent CEO comments should be dismissed. However this company has been around for many years, and have a lot of experience doing what they're doing. The CEO just came out and said something that is rare, and investors inititally responded postively, but are now selling off again. The stock action would actually suggest total distrust in the CEO comments, which makes no rational sense to me.
I mean, how much more in earnings and EPS would the additional revenue from the aquisition bring ? Also EPS should be done on a non gaap basis, so we have to add back stock based compensation. Of course with non gaap, all one time gains or losses should also be excluded. Here's what I come up with.
Starting with revenues, I'm upping it from $204M for the Mar qtr to $310M/qtr going forward. I am using a 47% margin(average of the last 3 qtrs), R&D of $55M, S,G&A of $37M( 50% more than the Mar qtr for 50% more in revenues), a tax rate of 35%, and fully diluted share count of 35.6M. After all this, I'm adding back $8.75M in stock based compensation. My final tally is $1.15/qtr non gaap after tax EPS.
Any feedback is welcome.