Thanks poojing22. Just reviewed the results and another very poor quarter for UG. This company is on a run rate for annual sales revenue of less than $10 million with a $77 million market cap. China is having a very significant, negative impact on the business. They need to figure out a way to get additional distribution channels to avoid this fluctuation in revenue. Yes, management has been saying that 3rd quarter should result in more significant revenue (they hope) and they have a new product which we don't know how it will positively impact the business. I suspect the 2nd quarter is going to be another poor showing - 3rd quarter in a row. There appears to be further downside on this stock based on current trends, despite the rock solid balance sheet and dividend. The only thing holding this stock up is the dividend....and if they keep it in place, they will be paying out far in excess of 100% of earnings for this year. Not good.
Luishone - I take a different approach to investing....with little focus on the buying and selling side of what the market does as you do. However, I do periodically watch when the insiders are buying and selling, that can be a prediction of where the stock is headed. My analysis focuses primarily on the numbers and management comments since it is an objective way to value the underlying business, without influence on what other traders think. No one can predict the future....all I can say is this Company stumbled terribly this last quarter and I think future profitable growth is a little less certain than it was even just a quarter ago. If they can deliver in future quarters and get back on track, there will be upside. However, another stumble is going to bring this stock down hard and below $45. We'll see what happens with the stock.....Note the executives are not buying any stock at these levels so you may get an entry point lower than this.
Luishone - You obviously didn't read my message. Does it sound like I am pumping this stock? No, actually the opposite. I am a disappointed long-time shareholder who voted with my pocketbook and sold 3/4 of my holdings. Management didn't accept responsibility for the mistakes of mismanaging their walnut inventory and taking a bloodbath from pushing product out the door. They didn't apologize nor did they own up to it. I have respect for management that acknowledges their mistakes and what they are going to do to prevent it from happening again. So, I voted with my pocketbook and sold 3/4 of my holdings at twice my basis and I disclosed that. I hate negative surprises. They should have given investors a heads up, but they chose not to do that. Of course, they sold a nice chunk of stock before all of this was disclosed, too.
Management provided a little head up last quarter that this first quarter was going to be soft. How soft is the question of the day. By this date last year, they had already announced earnings and we still are waiting. I think that may be a bad omen. This stock has further downside if this quarter turns out as bad as last quarter, with or without the dividend.
I have admired JBSS management for the past several years when I was first introduced to this business. For the most part they have done an excellent job managing their business, until this quarter. The walnut inventory was mismanaged in my opinion and this caused a big hit to earnings this quarter as this commodity suffered significant deflation and they could not unload fast enough.. They expressed that it appeared to be a one-time hit that should not continue to occur as inventories have been replenished with walnuts that cost significantly less. It felt like this was a surprise to management and that is what disturbed me more than anything. Also, there was certainly no heads up to investors prior to the conference call.....They knew the impact, but chose not to say anything or guide lower to eliminate the element of surprise. A bit disappointing....
In addition, the export business that we hoped would bring dividends was surprisingly discontinued. Like any business, you take some risks and not everything works out as planned. I admire them for admitting their mistake and moving on. Going forward, I am concerned about revenue growth given the huge deflation in nut costs (walnuts are down 50% from a year ago and almond, too, albeit not as drastic). That is going to create a headwind on the revenue side for the next 12 months. We may find low or no revenue growth for a few quarters. To be fair, other parts of their business appear to be doing well and as they expand their distribution points, the company should continue to do well. They also have some capacity to grow their business without the need to expand. Seems like there is not much catalyst to the stock right now (could see some downside risk at these levels), without a accretive acquisition. They continue to evaluate opportunities, but none have been the right fit to date. I reduced my current position, but am retaining some of it for the long-term. Good luck all.
Good luck pitsel123. Everyone is entitled to their own opinion. Cramer is a manipulator and probably took a massive short prior to spouting his mouth off. I hope he gets busted by SEC.
Jim, I wish you would keep your BIG mouth shut and stop trying to manipulate stocks in the small cap sector. Do you know that Coke paid 10X sales for Vitamin water? FIZZ is very much undervalued based on that metric. LaCroix is the #1 sparking water brand that has very strong brand loyalty and revenue/profit growth trajectory. The company is debt-free and practically prints cash, and that is after $6 million in compensation paid to Mr. Nick Caporella. Mr. Caporella is not going to just roll over and sell this Company for a song. He will get FMV for this Company and with the right distribution partner, further appreciation is ahead. Don't bet against Mr. Caporella.....or you will wish you had not. Jim, I dare you to take a strong short position.....
This stock is a great value play at current prices. Expectations are so low that this stock has no where but to go up. Dimensional Fund Advisors (a value-driven mutual fund company) has a 6%+ position.
Don't be surprised to see another player come in and swoop it up at these current prices. Think Warren Buffett and Berkshire. What a nice acquisition for Burlington Northern and would complement their railroad business nicely!
This opportunity reminds me of a similar situation with Green Mountain when it was so cheap. I owned it for a couple of weeks and picked up a 70% gain in my Roth IRA. This one has similar characteristics in terms of cash flow, PE, and valuation. I hope no one buys it for at least 1 year....need long-term capital gain treatment on this one since held in a taxable account Good luck longs!
Sentiment: Strong Buy
FoodDot - Read the press release that identified a new director so they are back in compliance and disclosed that in the 10Q/10K earlier.
However, I do agree with you that the 4th report was UGLY ....Sales weren't even $2 million for the quarter. They are a $16 million in revenue company and sounds like first quarter is going to be bad, too. I don't know how this stock moves higher from here given poor outlook. The positive is the new products....but I would rather wait and see what happens. This thing is selling for 20X earnings or better and that is too rich for the outlook right now. I think stock moves lower and I sold my entire position today. Good luck longs.