posted
Purl, have you looked at ETLT's 10K which was released after the bell today? You know I value your opinion greatly, would be really curious to hear what you thought of it.
My thoughts on it are summed up in this email I just sent to my dad, have spent the last 2 hours reading it over.
Am a little torn over it though, would value any input you had on the subject
---
Dad,
the ETLT 10K finally came out after the bell today. And I'm sorry to say, the 4thQ was very disappointing. It's almost stunning in a way, because historically this has always been their best Q. as they explain in the 10K that came out today:
"Historically, our business has been highly seasonal with nearly all of our revenues being generated in the fourth quarter. While our business will remain seasonal, it should be less cynical in the future because of the sale of lamb meat and embryo transfers to dairy cattle, a process which occurs throughout the year."
this was certainly the case last year: last year they made a whopping $15.4M in the 4thQ, for a huge $8.8M profit. The 10K doesn't directly state 4Q numbers, you have to subtract off the first 3Q numbers to deduce them. In doing that, they managed in the 4thQ: $280K in sales, $590K cost of sales, for a loss of $310K! A tiny loss, and they still made .14/share profit on the year, over $5M. But still - honestly, I am shocked, it's astounding that (a) they manged only 3% of the revenue in Q42004, that they did in Q42003. what the hell happened?!?! I thought I was reading it wrong, had to read it 5x in a row. Almost doesn't seem possible.
In searching for an explanation, I thought maybe it was an accounting issue: ie, they couldn't "book" the normal 4Q revenues on that Q, and had to delay until Q1 for some reason. But - I see no evidence of this in the 10K, and I read the entire big document twice over.
The main things I can figure are 3 reasons. One is mentioned in this paragraph:
"Revenues increased by $1,338,793 or 9% to $16,834,759 for the year ended December 31, 2004 from $15,495,966 for the year ended December 31, 2003. The increase was primarily due to an increase in the sales of rolled mutton of $3,436,012, dairy cattle embryo transfers of $2,951,807, and the sale of live sheep of $92,723. These increases were partially offset by a decrease of $668,795 in the sale of lamb meat, $4,450,602 in sheep embryo transfers and $22,352 in the sale of sheep embryos."
a decrease of $4.5M in sheep embryo transfers, which normally are in the 4thQ, I assume. They mention the decrease in market for this procedure in this paragraph ("The market for sheep embryo transfers is decreasing.":
"Cost of sales increased by $3,797,771 or 138% from $2,752,811 for the year ended December 31, 2002 to $6,550,582 for the year ended December 31, 2003. The increase in cost of sales is attributable to the collecting and processing of lamb meat and the expansion of embryo transplants to dairy cattle. Gross profit as a percent of sales decreased to 57.7% for the year ended December 31, 2003 from 78.2% for the year ended December 31, 2002. The decrease in the gross profit margins is attributable to the reduction of sheep embryo transfers as a percentage of total revenues which have a higher profit margin. The market for sheep embryo transfers is decreasing. The Company began to sell lamb meat and transfer dairy cattle embryos in 2003. These two new projects partially offset the decline from sheep embryo transfers."
The second reason I would guess is that somehow they shifted some of their revs/profits into the first 3Q's, that normally would have occurred in Q4. they mention how there should be less seasonality in their business in the first paragraph quoted above, but clearly the part about "while our business will remain seasonal" is patently false, based on the huge dropoff in revenues in Q42004.
the third reason, which I am somewhat guessing at, is that the termination of e-sea somehow factored in here. It's not a surprise to me that they lost some money in a failed attempt to buy it out, but - perhaps they paid less attention to their "core business" because of the anticipation of e-sea. I dunno, this is pure speculation on my part.
Anyway, they earned .14 on the year (basically all in the first 3 Q's), which is a disappointing comparison to 2003's .24 a share profit. Needless to say, I was somewhat blindsided by the massive revenue dropoff in Q42004, never saw it coming even though you know I'm far from lazy about doing my research. Not much to say, am sorry and feel badly about it.
However, .14 a share profit still implies a P/E of: 2.5. not the P/E < 1 I was hoping for, but - still pretty tiny.
Looking at the balance sheet, is fairly ridiculous, did improve in 2004. These are their numbers:
cash balance per share: .93 shareholders equity per share: $1.28
assets: $40.2M liabilities: $2.2M
assets - liabilities = $38M = $1.28
pretty ridiculous for a .35 stock, trading at 35% of cash value. Of course, a caveat is that the cash is only earmarked for use in china:
"Although the Company has a cash and bank balance of $16,302,464, all but $1,018,226 is arbitrarily restricted by management for certain uses within the People's Republic of China."
in searching for their future plans, the key paragraph from the 10K seems to be this one, that they will focus on in 2005:
"Acquiring a dairy cattle facility in the PRC to increase its embryo transplant revenues from dairy cattle - Acquiring a facility in the U.S. to harvest dairy cattle embryo's If the company is successful in implementing this strategy it should increase both the Company's revenues and profit margins."
honestly, I don’t know what to say re: hold vs sell. They seem ridiculously undervalued by any stretch, but - I admit that the 4thQ numbers were extremely disappointing.
I am going to call Kenneth Maciora tomorrow morning and try to find out what the heck happened in the 4th quarter. I am not even sure he will take my call, we were both pretty ticked off when we hung up from our call yesterday. But, I will try, maybe I'll give the secretary a different name. Probably I am going to hold at least until I talk to him and try to get his take on the 4thQ numbers. Obviously, will let you know what I find out.
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<blueranger>
unregistered
posted
I think china has been adjusting the value of its currency... check the dollar vs yen changes over the last quarter...
there are many companies that have lots of money. but no business... jdsu started business during the stock boom years and there ipo netted them millions and millions.. all for the bank...but the bottom fell out of the fiberoptic market so this giant company with lots of money stock is worth about 1.50
so for what its worth maybe the cow egg sector is just not running on all cylinders.
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posted
"It should be less cynical in the future because of the sale of lamb meat and embryo transfers to dairy cattle, a process which occurs throughout the year."
please dear god they meant cyclical where they said cynical if not can someone explain to me wth that means
-------------------- "The Americans will always do the right thing... After they've exhausted all the alternatives." - Winston Churchill
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Net Income 2004 6,410,853 Net Income 2005 4,232,862
Float 2004 26,968,121 Float 2005 29,551,485
Key Notes:
Revenues increased 9% Cost of sales increased 57%
reduction in sheep embryo transfers which has a higher profit margin
increase in the sale of sheep meat and cattle embryo transfers which has a lower gross profit margin.
Now discuss those numbers in your mind.
Cash has increased greatly. Assets and equity show an acceptable increase. Cost of sales are up and profit margin is down. Float has remained relatively constant. Moving from sheep embryo to beef embryo. Company is expanding into America.
Overall, company is shifting focus of business from sheep to beef. Based on share value, the company is greatly undervalued.
**
What you cannot explain is why the shift from high profit sheep embryo sales to lower profit beef embryo sales. I am sure there is a logical explanation, such as their region of operation is now saturated with sheep, but has room for beef herds.
You can use embryo implants to increase herd size but will eventually reach a point where the natural birth rate increases such, transplants are simply no longer needed; cheaper to allow sheep to do their own thing.
Blue, I would not fret too much over this company. You are in at a price significantly below the true street value of its stock. You can only win.
Remember, markets are totally crashed right now and a majority of stocks are at their absolute rock bottom support prices, some even below.
All I see going on is a healthy increase in cost of sales which permeates through all data.
Nonetheless a positive EPS of .14 per is very healthy, very impressive. The higher EPS during year 2003 was truly unreal for their stated gross revenue. Their profit margin was too high.
I think your Lizard Brain is getting to you in an emotional way; your expectations are too high. It is rare you witness profits like in their 2003 year, which is actually worrisome. You should worry less with their profits being most realistic, and your expectations now need to be more realistic.
Personally, I would continue to hold this stock; all looks very good to me.
posted
honestly though they should at least proof read thier releases spelling and puctuation dont matter here its a message board but thats a national press release for investors you shouldnt have mistakes like that lol
but again if it means something different in this context feel free to tell me
-------------------- "The Americans will always do the right thing... After they've exhausted all the alternatives." - Winston Churchill
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As you can see, Blue, revenue continues to increase but their decreasing profit margin is concealing the true financial picture. They have increased realized revenue enough to surpass the falling profit margin meaning they are actually doing very well. Remember, realized revenue is complex data not "broken out" in financial reports.
Decades back, when I still lived on our rural farm in Oklahoma, a favorite uncle arrived home late at night, totally wasted on white lightning.
He boasts, "I just walked fifteen miles!"
One of us asks, "Where'd yall come from, Luther?"
Luther grins, "I walked over here from Eagletown."
Wide eyes, "Luther, Eagletown is only five miles."
He teases, "Well yall didn't count the steps I took sidewards and backwards!"
posted
Now that I have your attention, a true final analysis is investor perspective.
There in lies another rub.
It is the final majority investor perspective which will make or break share value. Making a reliable estimate of investor perspective, is an impossible task.
My opinion is a vast majority of online traders and online investors, rarely do much research, and even less analysis of financial data. This why we profit so well; they are suckers.
It is possible many will simply note the lesser EPS for 2005 and push the panic button. This seems a negative, and could be for awhile.
However, the really real final analysis is a buying dip might be generated affording a chance for more sage investors to load up at the expense of those bozos who don't have a clue.
Your challenge is, how much worrisome stress can you handle before you piddle your pants?
To help encourage you but not to make a decision for you, recall what happened when some really savvy investor down ticked ALMI down to trigger a bunch of stop losses, then bought all he could, or maybe she could, as quickly as possible.
That person of unknown gender played a very cold calculated game and make very good profits, by doing nothing more than triggering panic via down ticking ALMI into stop loss firing.
All told, from the low point of that event to today's share price for ALMI, she made an easy profit of fifty cents per share. Not bad, yes?
Others, who do good research, also cashed in on that down tick game; many made decent profits.
Should you find yourself not comfortable, by all means, sell right away and take profits.
Blue, don't let your Lizard Brain rule. Make good use of your logical frontal cortex to arrive at a decision most comfortable for both you and your dear dad. Keep yourselves within your comfort zone but never panic.
Don't be a Lizard meal for a cold calculating cat.
posted
gotta be better lookin' than i am, and i just gave my last quarter to the parking meter next to the coffe shop so i could log in on their wireless...
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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posted
i liked cheif broom...yeah i know he was fictional, but he had the best dreams.....
Ken was just a little better off than Hunter....
and Jerry? well he didn't "get by" after all did he?
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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<blueranger>
unregistered
posted
wife wanted, must know how to cook and clean and take care of a man...must have a pick up truck and bass boat... send photo of bass boat to *********.***
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There was a major news story on the boobtube about "pay-by-phone" parking meters, and the next day, that topic came up on a talk radio show in Los Angeles.
The television news coverage was good complete with video and pictures of the mailbox kiosk for, coins, charge card or cell phone payment.
CLSI is right in there on that technology, a new technology which is just now beginning to spread through major urban areas and a lot of college campus facilities.
CLSI has taken this one step farther by providing ticket collection services, which nets a municipal government more money than they make on their own.
Someday, CLSI will do very well.
I'm sitting on a half-million shares now and still working on accumulating a million shares.
I also note Blue is still annoying me with his bids of .0171 per share.
quote:Originally posted by glassman: i liked cheif broom...yeah i know he was fictional, but he had the best dreams.....
Ken was just a little better off than Hunter....
and Jerry? well he didn't "get by" after all did he?
and a little worse off than kerouac, dean drove the koolaid acid bus but was also the followed man in on the road....anyways getting to be trivia here.
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<blueranger>
unregistered
posted
the only stock i am holding is efa.. cause its my retirement account..
i day trade pennies.. right now i am using quotetracker (left microcap) and I am using the mikey method...
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posted
mikey method isnt that the one where you put all of the PUMPED stocks (mikey is a pumper) into a pile and play them the way mikey wants.
Mikey makes a killing.
I guess the HELPFULNESS isn't a bad thing, its aimed at newbies Get them to make money off your pumps, get more pumps to make more money. I thought it was great marketing, use a couple lesser used intraday indicators instead of more common ones and you almost seem knowledgeable.
posted
yes PG i managed to get bull and parking meter in your thread, i admit it, i am a shameless pumper....
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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<blueranger>
unregistered
posted
i know 2 mikeys in this business.. mike parker has always told me the pump and dumps rather than refer me to them...
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<blueranger>
unregistered
posted
mikeys method is to put everything in.. including yours....throw everything into quotetracker....check for indicators,,, eliminate the pump and dumps and those at the top of there resistance...
buy those that have volume building...
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posted
Mikey runs a yahoo group whose "picks" are at times paid for by the companies as well as there own picks.
I wouldn't have commented on the method if i hadn't read it.
buying stocks with volume and using lagging and leading indicators, pivot, resistance and support points is not a new idea, if anyone is unable to use any of the above they should be papertrading.
It doesn't eliminat pump and dumps it actually asks you to enter every pump on a chatboard or yahoo group and buy the one with the most volume.
Wasn't saying mike was a bad guy,he's not. actually in some ways the system can help a newbie thats to lazy to figure it out when to sell. But it also promotes no DD and playing pumps which is where that crew makes its money. And is totally unhelpfull to newbies.
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posted
in looking over my calculations again last night, am embarassed to say that i must have made an error originally. while it was still a slow Q4 compared to 2003, not nearly as bad as i had first calculated.
The Q4 numbers aren't a loss, they are: a $478K profit on $1.17M revenues, or about 1.5 cents a share profit.
my apologies - usually i'm very careful in doublechecking, but had a lot going on last evening and somehow miscalculated, oops! i guess that's what happens when you try to cook dinner, go over homework with kids, and review a 10K all at the same time!
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