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Universal Security Instruments Inc. Message Board

freshbread4u 6 posts  |  Last Activity: 18 hours ago Member since: Jun 3, 2002
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  • Reply to

    In case you missed this from 4th qtr rept

    by dvb6000 Feb 27, 2015 4:11 PM
    freshbread4u freshbread4u 18 hours ago Flag

    jackmaster: My guess is that you do not understand how a company gets shelf space for its products in most supermarkets. In order to get on the shelves, the company has to pay a "slotting" fee which is classified for accounting purposes as a promotional expense. Most times, the slotting fees are paid in free or discounted goods. For the most part, that is the promotional expenses that Armanino is currently incurring. You seem to think that they are advertising on television or the like. That's wrong.

    By the way, it would be nice if "high end frozen Italian food" brands had little competition, but that too is not correct. There are plenty of competitors for AMNF. Also, the frozen food segment sold in supermarkets is just a small part of the company's business.

  • Reply to

    In case you missed this from 4th qtr rept

    by dvb6000 Feb 27, 2015 4:11 PM
    freshbread4u freshbread4u Feb 28, 2015 11:23 AM Flag

    Once again, you need a bit of perspective. Armanino used to be a high dividend stock; now it is just paying dividends that are in line with many other food companies. For example, eight years ago, the dividend was roughly 12% when the special is included. Since that time, the dividend has increased, but the price of the shares have gone up seven fold. As a result, the dividend yield is much lower even though the dollar amount is higher. Many long term holders still talk about AMNF as a big dividend payer, but that's not really accurate.
    Second, there is no way to generalize about the effect of adding promotional expense and its effect on free cash flow. Remember, the main reason that the company has the cash to spend on the promo stuff is that FCF is so robust. Some is being funneled back to the shareholders in dividends, but another batch is being invested to grow the business. In 2013, that investment took the form mainly of new equipment. Since then, the focus has been on growing sales through promotion in order to fully utilize the plant.
    I have been a substantial shareholder in AMNF for a long time. One thing that I have learned during those years is that the management does not throw money at problems. There is no guarantee that spending on promotional costs will result in long term growth, but if this management thinks it is a good idea, then I have faith in them based upon their excellent track record.

  • Reply to

    Tomorrow's report

    by bellbell63 Feb 11, 2015 11:23 AM
    freshbread4u freshbread4u Feb 23, 2015 8:50 AM Flag

    It's no mystery. Armanino prices all its sales in Japan in dollars. I know this because I asked the company about it. The foreign exchange risk that bellbell mentions is on the buyer. The point, however, is that there is not much production of this sort of product in Japan itself. Sales into Japan of these food items are all affected by the currency. Higher prices in Japan can curtail sales of course, but the market there has been growing quickly, so the likely outcome is slower growth.

  • Reply to

    2 questions regarding AMNF

    by jackmaster20 Feb 17, 2015 10:29 AM
    freshbread4u freshbread4u Feb 21, 2015 12:25 PM Flag

    The discussion of someone else buying Armanino needs a bit of focus to it IMO.

    First, look at EPS history. In 2014 the figure grew by just over 15% above 2013. In 2013, the growth rate was again just over 15%. For a food company, these are good numbers.

    Second, consider what a larger food company could do if it purchased Armanino. Much of the distribution of the AMNF output goes through sales brokers. A purchaser with its own distribution networks could easily add the Armanino products to that network and greatly reduce the major costs for sales/distribution now paid to the brokers. A purchaser with its own plants could also move production of some Armanino products into new regions so as to reduce the transportation costs incurred with regard to sales outside the West Coast area. A major marketing push in the West Coast itself could also allow a buyer to step up production at the existing facilities. These currently operate on a one shift per day basis. Additional shifts would allow unit costs to fall as no material additional capital equipment costs would be incurred.

    Of course, Armanino is so small that it is not material for most large food companies. Still, there are organizations (like B&G Foods) that grow almost exclusively through acquisitions. Armanino is currently at the market cap that B&G normally buys, and B&G is not alone in pursuing such opportunities. The number of potential buyers may not be enormous, but there are more than enough to provide an actual buyer when the time comes.

    Remember the management has told us in its own way to expect a very good first quarter. The seasonality of Armanino earnings is such that Q1 and Q4 are normally much less than Q2 and Q3. In the past five years, the Q1 results for EPS have been within a tenth of a cent of the prior Q4. The Q4 report spoke of sales getting pushed from Q1 to Q4 and talked of a strong start to 2015. A good report might spark some interest. I expect some nice growth QOQ.

  • Reply to

    Tomorrow's report

    by bellbell63 Feb 11, 2015 11:23 AM
    freshbread4u freshbread4u Feb 19, 2015 4:23 PM Flag

    You are not aware of how Armanino actually sells to Asia. First, all sales are in dollars. There are no currency issues. Second, there is much less competition in Japan in the Italian food field. This lets AMNF get a much higher profit margin on Asian sales than on American sales. This more than makes up for what you call "transport" issues. Asia is a profit center for AMNF, not a problem.

  • Reply to

    Who would like to have company have an earnings CC?

    by dvb6000 Jan 10, 2015 11:05 AM
    freshbread4u freshbread4u Jan 10, 2015 3:31 PM Flag

    A conference call might be nice, but it is hardly the most important thing. What Armanino needs is more frequent dissemination of information to the market. Whether that is done through a CC or press releases or otherwise does not matter all that much IMO.

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