Stock Price is one fourth that of earnings. All value investors should grab this now!
Even without taking into account the future growth potential of this company, the investor is already being given a very wide margin of safety in case our financial projections don’t go as expected. You are buying something for a quarter of the level of its own earnings. You can literally get back your investment in less than a year.
You can expect to still earn even if the company’s revenue levels sink by 50%. You can’t get any better bargain than that. The company actually posted a loss in income in 2010 but that was mainly due to capital expenditures. You can see the level of their revenues after that and before that they were very financial prudent with their operations.
| Year | ||||
| 2011 | 2010 | 2009 | 2008 | |
| Net Income | 93.47 | -56.39 | 13.58 | 10.09 |
| Asset | 141.45 | 84.61 | 60.25 | 39.77 |
| ROA | 66.08% | -66.65% | 22.54% | 25.37% |
| Year | ||||
| 2011 | 2010 | 2009 | 2008 | |
| Current Assets | 79.63 | 32.7 | 45.74 | 26.18 |
| Current Liabilities | 9.61 | 9.08 | 4.75 | 2.59 |
| Current Ratio | 8.29 | 3.60 | 9.63 | 10.11 |
The company is making ceramic valves for manufacturing processes. Their product is something constantly in demand and in obvious need as they are within the heart of manufacturing for the whole planet. Excellent barriers to entry plus a prudent management makes it worth any investor’s attention.
| Year | ||||
| 2011 | 2010 | 2009 | 2008 | |
| Total Debt | 1.39 | 2.65 | 0.98 | 0 |
| Equity | 125.89 | -2.28 | 55.51 | 37.18 |
| Debt/Equity Ratio | 0.01 | -1.16 | 0.02 | 0.00 |
As a result of their heavy investment in 2010, their income surged higher than it was before 2010. They are now enjoying 66% returns instead of the usual 22-25% returns on assets. All things being equal, the investor should be able to enjoy record growth and income on his stock shares.
You can also see from the debt ratio that they are keeping a very conservative approach to their debt to equity levels. Even in their 2010 heavy investments, they used more of their equity instead of taking a lot of debts on. As a result, you can see their revenue levels have grown dramatically with very little debt on their shoulders to worry about.