Q: Peter and His Wonder Team
Based on my previous question last quarter I know you were cautious going forward. So again they report what appears to be a solid quarter. Does this in any way charge your perspective. In other words I would appreciate your current opinion. I am not sure if I should take my profit and be happy or continue to be patient because the odds would be in my favour for another modest run up. Your professional opinion is always helpful with a high degree of accuracy. As a little retail investor I thank you immensely.
Based on my previous question last quarter I know you were cautious going forward. So again they report what appears to be a solid quarter. Does this in any way charge your perspective. In other words I would appreciate your current opinion. I am not sure if I should take my profit and be happy or continue to be patient because the odds would be in my favour for another modest run up. Your professional opinion is always helpful with a high degree of accuracy. As a little retail investor I thank you immensely.
5i Research Answer:
EPS of $0.08 missed expectations of $0.086 and revenues of $91.1M beat estimates of $83.64M. This is the second consecutive quarter of disappointing results, and while it trades at a reasonable valuation of 13.3X forward earnings, its high and growing debt levels are a concern. Its valuation has been lower in the past, and so there is room for multiple contraction here. Given its high debt load and long-term declining earnings, we would feel comfortable taking some gains off the table here. With debt levels creeping higher, we feel this can begin to erode its profits and cash flow.