Q: WHAT IS YOUR OPINION? RECENT EARNINGS REPORT LOOKS GOOD. PERFORMING WELL. DOES IT STILL HAVE LEGS.
5i Research Answer:
VCM has been preforming strongly year-to-date, up 37%. Second quarter earnings were strong, reporting EPS of 15c, beating estimates of 6c and revenue of $61.95M, beating estimates of $61.57M. Revenue has been in decline over the last two quarters, but improved margins have helped to somewhat mitigate this impact. The stock jumped last week after it announced it would buy substantially all the assets of Casa's Cable Business for C$27.1M. It does have some debt and not a whole lot of cash. We think VCM is OK and while the stock has performed well recently, there are size and fundemental risks. It is cheap at 13.5x forward earnings, but we would wait a quarter or two to see how it can sustain momentum.