Q: Peter; ASTL seems cheap- as usual- but isn’t it getting so cheap someone might try a takeover? Could you update your thoughts on it now. Thanks.
Rod
Rod
5i Research Answer:
The company's sales beat estimates by 2%, but it lost 19c per share instead of an expected profit of 2c. Sales fell sharply and costs rose, worrying investors and the stock dropped 10%. Steel shipments increased but prices were lower. It is certainly cheap at 4X forecast earnings. It is debt free with more than $100M cash. Insiders own 12.5% but it probably is getting larger companies eyeballing its decline. Free cash flow has turned negative, however. We think it is interesting today for investors who can await the next steel up cycle.