And now the company has expanded its stock repurchase program to $150 million so the company itself may be driving up the price. This is a good company, but I do think that it's over priced at the moment. I have followed this company since before they did the secondary stock offering when Jacmar purchased about 15 years ago or so (it was about $2.10 per share then). It has done well but the current PE is pricey and the stock repurchase will require them to borrow money if they actually do spend the full $150 million. That's the same as buying an overpriced stock on margin in my opinion. They should continue their conservative expansion and forget the stock buyback.
You may very well by correct and I hope you are. But the low PE is pretty deceptive because of those "tax benefits". Even the 2013 earnings were only about 48 cents if you remove the tax benefits and not the $1.23 reported. I read the notes to the financial statements and I can't tell how much longer we can expect to see the tax benefit added to income but it will be fully used up at some point. But if they could return to 50+ cents per year EPS before that tax benefit that would be good
The stock is cheap when compared to book value but not all that cheap based on earnings. After removing non-recurring tax benefits and other non-recurring items from income the net income is much lower. At the last annual shareholders' meeting management forecast 18-25 cents for the current fiscal year. Then LF missed the missed quarter earnings estimates so it's possible the annual earnings after removing non-recurring items will be less than 18-25 cents. That puts the PE at 25-35 and not the 6 or 7 shown on Yahoo. I am long the stock and holding but I would not buy here.
I haven't seen anything to indicate that they were actually buying. I think that the question was asked at the quarterly conference call immediately following the annual report and the answer was that they hadn't yet (I could be wrong but I think that's what was said) I've seen many stock repurchase programs announced by other companies when they didn't purchase any or very little of what they "authorized".
You have missed something. This is from the most recent annual report:
Share Repurchase Program
Our board of directors has approved a stock repurchase program authorizing us to repurchase up to an aggregate of $30 million of our common stock through December 31, 2014. We intend, from time to time, as conditions warrant, to repurchase stock in the open market. Purchases may be increased, decreased or discontinued at any time without prior notice. The plan does not obligate us to repurchase any specific number of shares and may be suspended at any time at management's discretion. We currently have approximately 70 million outstanding shares of common stock.
"This share repurchase authorization reflects the board's continued confidence in LeapFrog's strategic direction, strong financial condition, underlying share value and ongoing commitment to maximizing shareholder value," said Ray Arthur, Chief Financial Officer.
But even reading the KGJI information makes me me uneasy than it does comfortable. It is a special dividend of 8 cents per share meaning it is not necessarily going to happen again and it required special provisional government approval before they could pay it. They say it will be paid before 8/28 but has it been paid or even approved by the government (I don't see anything to indicate).
I think that they're going to have to announce something positive before they get much of an upside move on the stock price. By something positive, I mean actual results like increased sales and improved net income not just a new product announcement with high hopes.
I agree with you and a penny per quarter would say a something. This would be a dividend yield of about 2% based on the current stock price (not too bad) but it would only be a pay-out ratio of around 3-4% based on the company's net income and cash flow. It looks to me that the company's net income is pure cash flow. They invest next to nothing back into the company. Based on what they've done with their cash the past few years, they could certainly conservatively support paying out 5 cents or more per quarter. Unless they need the cash to grow (which they haven't so far) they should be paying some of it out to shareholders.
I agree with trf456 and I admit that I am trying to influence others. Not for my own gain but to keep them from losing their shirts. I have followed many Chinese companies with similar PE's and cash balances trading for low prices. Luckily I have only invested in one of them and got out before it really crashed. They always have very low PE's and trade for less than half the cash balance in the bank with no debt. Then one day they stop issuing financial statements and the price drops to a few cents. This company may be legit, but I have seen similar scenarios in the past and not one worked out. On paper this stock is probably worth $15, the question is can you trust what's on the paper.
The "value" of the property is NOT on the LF balance sheet. That is my point. It is only the book value that is on the balance sheet. Book value does not even attempt to report the real fair market value it is just historical cost minus depreciation. The real fair market value of Property and Goodwill could be wildly different than the book value. That is why book value is such a poor way of valuing a stock except maybe to establish an approximate low end value.
There is no one measure of value by itself that is very meaningful. Book value can have some real drawbacks. Book value is a historical cost on the books. It is meaningful if you are talking cash in the bank and it is usually pretty close when you are looking at accounts receivable, accounts payable, inventory, and other current assets and liabilities. But it is usually totally useless when looking at real estate, the value of patents, and many other long term assets. If you bought or built a factory 30 years ago the book value would be near zero (historical cost less accumulate depreciation) while the factory could be worth hundreds of millions. Book value may have some use in determining the lowest value a company is worth (not always though) but future earnings are the real determining factor in company value.
I agree with you. But LF has not been as much of a value as many posters seem to think. Yahoo has their PE at around 6 and several posters refer to "single digit PE". But a good part of those earnings include non-recurring items including tax benefits that will soon be exhausted. Management had estimated "normalized earnings" (that excludes non-recurring items) at only 18-25 cents for the current full year. That was before the current earnings miss so I presume that estimate of earnings for the year will be lower. That might put the PE at 30 or more. LF may be a value when looking at Book Value but not when looking at earnings.
I agree. I've been saying for a while that this stock is pricey when a lot of posters are saying how cheap that it is. The PE is at least 25 and probably higher based on the current fiscal year's earnings after eliminating non-recurring items and that is after today's 14% price decline. Four months ago management estimated current year earnings at 18-25 cents and now they have not even met their low expectations for Q1. So if earnings come in at the low end of management's estimate for the year, 18 cents, then the current forward PE is about 35. I do still own some shares but I have sold covered calls against those, but I sure wish that I had sold them all.
Obviously it is a failed presidency with regard to the economy, foreign policy, securing the borders, etc. After 6 years it is hard to keep putting the blame on George W. Bush. That being said, GWB wasn't exactly a great president either. The housing bubble was a horrible fiasco caused by federal policies. It's true many of those were not initiated by the GWB administration but the damage happened during his watch.
We need a good president and a decent congress to get the economy moving and get the federal fiscal house in order. The national debt will cripple this country and weaken national security if it is allowed to go unchecked. It is unbelievable to me how poorly the federal government has functioned for the past 14 years.
The company has not put up stellar earnings results to say the least and management estimated annual earnings at 18 to 25 cents for the current fiscal year. That puts the forward looking PE at about 28-40 depending on where earnings end up within management's estimate. It is not a cheap stock and its products have to perform very well for this to be a good buy. I am long LF but I've sold some Jan 2015 covered calls that will get me out with a small profit if they exercise.
But you have to be patient. During the annual conference call management estimated the following year's annual earnings per share at 18-25 cents per share. That puts the forward looking PE at about 30 after removing tax benefits and other non-recurring items. That's assuming they hit the upper end of management's earnings estimate.
I also have no position but follow and post here. I have seen this exact scenario play out with other Chinese companies. A PE of 1 or 2, selling for a discount to cash, great growth. The numbers look like a sure thing and based on the numbers alone you should borrow against your house and take cash advances on your credit cards to buy this stock. But I have seen it several times, the companies just fizzle and disappear. So I follow just to see but I wouldn't buy a single share based on what I've seen with other Chinese companies in the past. It makes me even more doubtful when insiders have dumped half of their shares when the company sells for 50% of its cash balance.
I keep following this because the numbers look fantastic but I have seen other Chinese companies with equally good numbers that just disappear. They have a lot of cash, great earnings, sell at an unbelieveable discount and then "POOF" they no longer issue financial statements and you can get no information and the stock price goes to next to nothing and no trades. I'd be very careful.
If I needed money, I wouldn't sell a stock that was selling for half of the company's cash per share and at a PE of 1.5 unless I felt the numbers were bogus. He also sold 75,000 shares at $1.30 last December.
There is no way that I would consider two data points like that "a trend". If it was something like 8 consecutive years or 14 out of the past 15 years then maybe, but even then I wouldn't make a trade based on it.