Q: Can you give me your thoughts on their latest quarter? Would you be a buyer today?
5i Research Answer:
Sales grew 45% year-over-year to $20.3M driven mostly by the acquisition of DS Consultants and higher activity in core markets, especially mining and military-related WaterTech work. Its gross margins declined to 28% (against 33% in the prior year), reflect a shift in revenue mix, and it reported a small net loss in the quarter. Shares are falling after the release, but the broader markets are fairly weak as well. It is a small name ($64M market cap) and growth has been strong but margins are weakening. We would prefer to see the name regain positive momentum again before considering the name.