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I think they will always keep net income around the same ole same ole... watching cash closely right now I bet... and I stay for at least $3 bucks... Gonna put them in my VCM contest..
I'll guess 30mil revenue and .02 eps on the quarter. Forward guidance will be higher, due to the lower transportation costs, with 3rd qtr eps around .05, and year end results of .15 eps.
Give them a 15 P/E (industry average) and you get a value of $2.25ish without taking into consideration the dividend.
Tangable book is around $1.60ish, given a buyout possibility would be 2.5x that.
Target price for me to sell my shares= $4ish
any guesses on revenue and earnings estimates?
Goos analysis, and thanks you much for sharing. Long term, I see this going to $4 or higher (3 years with current market sentiment)
After reading Golden Enterprises, Inc’s newly released Form 10-Q (symbol: GLDC), I first want to chastise holier-than-thou websites who point their noses into the air and say “We don’t cover penny stocks”. The Motley Fool (http://www.fool.com), for example, refuses to open a discussion board for “stocks trading at $5.00 dollars or below”, which includes Golden Enterprises. However, Motley Fool did not have a problem with pumping Horsehead Holding Corp. (symbol: ZINC) in *several* articles such as “3 More Outrageously Cheap Stocks” (August 10, 2008) when its share price was $9.99. ZINC’s share price is now $3.79.
How can anybody who reads Golden Enterprises, Inc’s newly released Form 10-Q not love the company? (Probably explains yesterday’s 21% jump in Golden’s share price)
NOTABLE GOOD NEWS
1. Hooray!!! Only 328 route representatives, which is down from 425 route employees six months ago. As I’ve written before, I hate to see people lose their jobs, but a realignment of distribution routes at Golden was sorely needed.
2. “Line of credit outstanding” is down 24% from the preceding quarter (and ZERO long-term debt).
3. “Gain on sale of assets” is up 327.7% compared to the same quarter in the preceding year. Don’t worry—Golden is selling off trucks that they no longer require due to the realignment of routes.
4. Golden repurchased 11,898 shares during the quarter for an average price of $1.88. (The number of outstanding shares is down 51,903 from the preceding quarter.)
NOTABLE NEGATIVE NEWS
1. “Selling, general and administrative expenses” is up 9.4% compared to the same quarter in the preceding year (and NO explanation).
2. “Interest expense” is up a whopping 83% compared to the same quarter in the preceding year (and NO explanation).
NOTABLE MISSING NEWS
1. ABSOLUTELY ZERO mention of Golden’s “one time cost associated with the re-alignment of the eastern portion of our route system” that appeared in their press release dated September 25, 2008. I can’t even clearly find the “cost” in the newly released Form 10-Q’s balance sheets. My guess: It’s buried in the “Selling, general and administrative expenses”, which rose 9.4%. Hmmm.
2. No explanation for these asset sales that are mentioned in the newly released Form 10-Q:
On August 20, 2008, the Company executed a Purchase and Sale Agreement to sell property located at 2926 Kraft Drive in Nashville, Tennessee and across the street from this address for $2,100,000. The property is scheduled to close in the second quarter of 2009.
On September 10, 2008, the Company executed a Purchase and Sale Agreement to sell property located at 4771 Phyllis Street, Jacksonville, Florida for $200,000. The property is scheduled to close in the second quarter of 2009.
On July 7, 2008, the Company executed a Purchase and Sale Agreement to sell property located at 321 Marble Mill Road, Marietta, Georgia for $556,000. The sale of the property occurred on September 25, 2008.
I would mainly like to know 1) What are these properties and why are they being sold? [my guess: Golden is selling off some of their small distribution centers due to the realignment of distribution routes] and 2) Will Golden show a loss or a gain on the sales? [and is now the right time to be selling real estate?].
3. The dividend that Golden will pay on October 29, 2008, has not been accounted for in this 10-Q, of course. However, the dividend that Golden paid in July 2008 cost $368,566. Golden currently has only $322,405 of cash and cash equivalents.
SUMMARY
As “giff”, the very balanced moderator for Golden’s discussion board on Investors Hub (http://investorshub.advfn.com/boards/board.aspx?board_id=13143) previously wrote, “It appears to me they have a very good CFO”.
I've always considered Golden Enterprises as a "broken" company whose management didn't realize that the company was broken. Well, when Golden's management awakens, they awaken in a big way. In a mere one quarter, Golden has made more positive changes with minimal impact on the balance sheets than I've ever seen in a company. I *like* Golden Enterprises, Inc.
I like discussing with giff.
>
> I guess I was thinking if you make re-align, it's for...
> - cost cutting
> - improve revenues
>
Exactly! (and it's the point that I wanted to discuss with you today even before I saw your new message)
I'm familiar with Golden's previous financial statements. Whenever they sold vehicles, they always showed a GAIN.
Thus, if they are re-aligning routes and (from the most recent 10K) "increasing distribution through independent operators and distributors", I would assume that they will be selling vehicles for a GAIN.
Previously, (I assume) they sold vehicles that were beyond use to the company (i.e. old, too many miles). For a GAIN. If Golden is now selling vehicles because routes are re-aligning, (I assume) they will sell vehicles that are in better condition. For a better GAIN.
Less vehicles = less gasoline, insurance, payroll, maintenance, etc. expenses. Thus, REDUCED COSTS to the balance sheets.
How in the world can Golden possibly claim a one-time charge for re-aligning routes?
I have only two (sarcastic) thoughts:
1. Maybe distributors work like "hypermarkets". If a company wants its products to be sold in a hypermarket (sorry, I don't know the big hypermarket chains in the U.S.), the company must pay a fee to the hypermarket to obtain shelf space. Maybe that's Golden's one-time charge for re-aligning the eastern routes--Golden must pay the distributors to sell Golden's products (Ah, don't you just love the Mafia version of capitalism? )
2. Severance pay for laid-off Golden drivers. For the sake of discussion, let's say that $0.06 of the $0.07 cost against earnings is for route re-alignment (again, Golden didn't tell us how the $0.07 is divided).
$0.06 X 11.78 million shares = $706,800
Of course, we have no idea how many drivers got laid off, if any. If two drivers got laid off, they are very expensive drivers.
As usual, though, we must wait for the 10-Q in the hopes of some explanation.
One time... I do see your point now.
I guess I was thinking if you make re-align, it's for...
- cost cutting
- improve revenues
I cannot think of any reason a business would make this change for any other reasons? What value does that bring?
I would think the majority of that $.07 is the "increases in commodity cost"... and I know those are coming down.. gasoline.. wheat additives?? corn additives?
From what I vision forward, they will continue to have the cash to pay the divy. Not real sure why they want to pay a divy. Seems they could use that cash to improve equipment, greater efficiency or add something that increase sales.
anyway, I still think this stock price is down and will recover..
BTW.. I get a bit bitter when stocks I own go down... an knowing the company can do a better job... LOL
Hi, giff:
>
> I can certainly understand any bitterness
>
Me? I'm not bitter. I just love to analyze the H*ll out of any new information. Remember the first sentence of my original post--"my long-term hopes for the company are high".
However, for the sake of discussion...
>
> "...such generosity may end.." Humm? Why would you think that?
>
Well, the funding for the dividend must come from somewhere. If net income for the quarter won't cover the dividend, then the company will start eating away at retained earnings.
>
> Just from the PR... "...one time cost... created
> approximately $.07 per share negative impact..."
>
giff, hmmm, you'd better read the press release again.
"Net income in the first quarter was adversely impacted by continued increases in commodity cost and a one time cost associated with the re-alignment of the eastern portion of our route system. The net effect of these costs created approximately $.07 per share negative impact on our earnings per share."
These sentences are very tricky. Is it really **ONE TIME** if the company only re-aligned the eastern portion of their route system? How much of that $.07 is for "increases in commodity cost" and how much is for "one time cost associated with the re-alignment"? The press release doesn't say.
In short, we can predict NOTHING about the next quarter because we don't have enough information to understand the current quarter. How many "portions of our route system" do they have? Don't know.
I think you see my point....
Cheers!
It seems to me when you own a stock like this one...
You must accept that the ones with power have total control. You just won't get information that may or may not be important.
Do I believe they could cut expenses and turn 10% NI or so? Yes
Do I believe they could explain stuff in greater detail? Yes
Do I believe they are top chip food company? No
Do I believe they are ultra conservative? Yes
Do I believe they look out for themselves first and shareholders second? Yes
Am I happy with the return from my flipping, accumulation and divy? YES
Why? I'm up significantly here and believe in this down market this is to be expected. From a timing point, I got pretty lucky here...
Thanks to Tim
I can certainly understand any bitterness if someone owned in '07 and held. That said, It's tough for me too.. to stay with a loser and continue to work it.. add more with confidence with expectations of making it back and more.
You opinion is very valued by me Luke and thanks for a very good post that provokes good thought!
interesting Luke "...such generosity may end.." Humm? Why would you think that?
It appears to me they have a very good CFO and they know how to manage cash very well. History has proven that... Should I expand?
Just from the PR... "...one time cost... created approximately $.07 per share negative impact..." The message says they would have made $1.1 million... or $.10/share... and historically we trade above $2.50 at that level of net income...
I say history will repeat so will continue to flip a few and add to base here...
The thing I don't like about this one is trading liquidity.
Golden Enterprises Announces Quarterly Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Golden Enterprises, Inc.’s (NASDAQ: GLDC) Board of Directors today declared a quarterly dividend of $.03125 per share payable October 29, 2008 to stockholders of record as of October 6, 2008.
For the thirteen weeks ended August 29, 2008, Golden Enterprises, Inc.’s net sales increased $1.5 million or 5% on net sales of $29,850,688 compared to $28,394,228 for the same period last year. Basic and diluted earnings per share were $.03 compared to $.07. Net income in the first quarter was adversely impacted by continued increases in commodity cost and a one time cost associated with the re-alignment of the eastern portion of our route system. The net effect of these costs created approximately $.07 per share negative impact on our earnings per share.
The Company has been able to increase its prices to its consumers during the first quarter of 2009 in an effort to offset the unprecedented increases in fuel cost, escalating commodity cost and a weak dollar. Additionally, the re-alignment of the eastern portion of our route sales system will reduce costs associated with selling and delivery. The benefits of these changes will help move the Company forward with improved profit margins.
The following is a summary of sales and income information for the thirteen weeks ended August 29, 2008 and August 31, 2007.
THIRTEEN WEEKS ENDED
August 29, August 31,
2008 2007
Net sales $ 29,850,688 $ 28,394,228
Income before income taxes $ 580,823 $ 1,335,037
Income taxes 226,357 492,664
Net income $ 354,466 $ 842,373
Basic and diluted earnings per share $ .03 $ .07
Basic weighted shares outstanding 11,783,385 11,835,288
Diluted weighted shares outstanding 11,783,385 11,835,288
This News Release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those forward-looking statements. Factors that may cause actual results to differ materially include price competition, industry consolidation, raw material costs and effectiveness of sales and marketing activities, as described in the Company’s filings with the Securities and Exchange Commission.
CONTACT:
Golden Enterprises, Inc.
Patty Townsend, 205-458-7132
Good points. Thanks for sharing. I have not had a chance to digest the release yet.
Quarterly Results Press Release
I am a Golden Enterprises (symbol: GLDC) shareholder, and although my long-term hopes for the company are high, improvements can come in near-term increments.
1. Yesterday’s quarterly results announcement was “bare bones” as usual. Most other companies that I follow include significantly fuller explanations and balance sheets in their press releases. In GLDC’s case, by contrast, I must always wait for their 10-Q (or 10-K) SEC filing.
2. Good ol’ Golden Enterprises. They declared the regular quarterly dividend. (…but it’s the second consecutive quarter where the dividend has exceeded the net income per share—with only $442,756 in cash according to the last 10-Q and 11,789,305 shares outstanding according to the current press release, such generosity may end *this quarter*).
3. When the 10-Q is filed, I’ll be looking for answers to these questions:
• According to the press release: “Net income in the first quarter was adversely impacted by continued increases in commodity cost and a one time cost associated with the re-alignment of the eastern portion of our route system”.
I need to see the amount of increase for commodity costs and the amount of the one-time cost for re-alignment of routes. I expected ZERO cost for route re-alignment. In fact, I even expected an immediate benefit.
If GLDC only re-aligned “the eastern portion of our route sales system”, we could see future one-time costs for the southern portion, the northwest portion, etc….
• According to the press release, “The Company has been able to increase its prices to its consumers during the first quarter of 2009 in an effort to offset…a weak dollar.”
Somebody really needs to explain to me how a weak dollar affects GLDC to such an extent that it even needs to be mentioned in the company’s press release. GLDC sells only in the southeastern U.S. Its “commodities” presumably come from the U.S. only. My read: “a weak dollar” is a fashionable excuse.
This tells the story... So what we need is a $500K net income Q to get us back to $3
Oh heck lukematt... that was a great DD post you made and valid Q...
of which I agree they should have explained this deal in greater detail.
Some of my search tips... Google'd Tennessee Chips... found telephone and googled the number... Everything else is in the filings. I haven't called the company but I imagine they would answer any questions.
The company is not perfect and I think they waste some SG&A on a that plane. $20K/month?? My bet is several other things too. A good operation guy might get this company's profits 2-3 or 4 times + current... just my opinion with the limited amount I've looked. The major shareholder is an old timer and he's tired conservatve imo
I still like the company... revs grow about 2-3% and $.12 divy... This company is undervalued right now IMO; the P/S ratio is only .2 and that is very low for a food company. Trading on the low end of it's 52 week range, P/B ratio is 1.16 which is pretty good and low, I can tell by looking, they manage there cash very well. Plus, very good trader Tim owns this stock and thinks it goes back to $3... I bet too.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=31727857
giff:
1. First, please allow me to compliment you. I raised an issue about an item in Golden's 2008 10-K, and you handled it very astutely. (I've probably been reading too many discussions on Yahoo! Finance, where the personalities are...how shall we say...different
2. I won't "analyze" the numbers that you presented. I do agree with your statement "Which may mean 'Other' income will be gone in future!" Right now, we have no idea how Golden intends to use the Tennessee property; therefore, we don't know if it will produce revenue. The numbers in the next 10-Q may be a little interesting.
3. I am **amazed** at the information that you dug up about Prime Choice Foods. How did you possibly find it?
Prime Choice Foods acquired Tennessee Chips sometime around March 3, 2008. Golden's 10-K states that they required the Nashville property on May 2, 2008. I guess it's safe to assume, then, that Prime Choice Foods still occupies the property.
The question remains: What is Golden's **exact** relation to the property now besides owner?
I will conclude by saying...Please, Golden, a little more transparency in your future SEC filings.
See that note receivables is gone...
NOTE 2 - NOTES RECEIVABLE
-------------------------
Notes receivable as of May 30, 2008 and June 1, 2007 consist of the following:
2008 2007
---- ----
8% note, due in 120 monthly installments of $3,640
through November 1, 2010, collateralized by property $ - $ 132,955
8% note, due in 360 monthly installments of $12,474
through November 1, 2030, collateralized by property - 1,583,801
----------- -----------
- 1,716,756
Less current portion - 58,126
----------- -----------
$ - $ 1,658,630
=========== ===========
Ok I found it....
OTHER income $426,895...
interest income $134,799
Rental income $39,411
Other operating cash payments/receipts $252,685
http://www.primechoicefoods.com/
http://www.primechoicefoods.com/pressrelease/PCFAcquiresTennesseeChips.pdf
Date Released: 03/03/2008
Bristol, VA. Prime Choice Foods, an Organic Snack Food manufacturer, has acquired a Nashville based company, Tennessee Chips in order to expand their capabilities for the increased demand for quality Mexican Tortilla Chips and other snack items.
Tennessee Chips, which began in October 1999 as a private label supplier, is best known for their baked tortilla chips, pita chips and fried tortilla chips. When asked why he purchased the plant, Mr. Jose Gomez, president of Prime Choice Foods (PCF), commented saying “Purchasing Tennessee Chips adds another 67,000 square feet of needed space, and it gives us the equipment to expand our current line of items to provide customers with pita and baked tortilla chips”. He continued saying, “the new line will provide “better-for-you” baked snacks for all PCF customers and consumers.” The new plant will carry the Prime Choice Foods name.
Prime Choice Foods has quickly become a leader among the Organic Snack Food manufacturers who produce top quality tortilla chips to meet the demands of consumers looking for healthier alternatives for their diet, yet feed their hunger with tasty snacks. Just two years ago, PCF was recognized in Hispanic Business Magazine as the second fastest growing company in the United States. To learn more about PCF, contact Mauro Gomez at: 276-466-8785, or email mgomez(at)primechoicefoods.com.
http://www.fastpitchnetworking.com/pr/pressrelease.cfm?PRID=21576
Just thinking... The buyer must have exited...
GLDC sold the place in 2000 for $3.8 mill = $1.7 mil + $2 mil note
GLDC bought it for in 2007 for $1.7 cash + canceled note $1.7 = $3.4 Mill
$3.8 mill - $3.4 mill = $400K Made about $400k in the deal.. Kinda like a wash but now we own it again.
Tennessee Chips, LLC A co-packer for the company... See...
http://maps.google.com/maps?f=q&hl=en&geocode=&q=2930+Kraft+Drive+in+Nashville,+TN&sll=37.0625,-95.677068&sspn=48.909425,79.101563&ie=UTF8&ll=36.112067,-86.758261&spn=0.012273,0.019312&t=h&z=16&layer=c&cbll=36.10904,-86.758286&panoid=adqDq7aqXawusjlrJn17fw&cbp=1,166.3758812170725,,0,5
http://www.tennchips.com/
http://www.bizjournals.com/nashville/stories/2000/11/27/daily24.html
A "wash" in which sense?
Interesting... Seems like a wash?
GLDC: Revolving Door Property
From Golden Enterprises, Inc.’s (symbol: GLDC) Form 10-K for the fiscal year ended May 30, 2008:
“On May 2, 2008, the Company re-acquired the property located at 2930 Kraft Drive in Nashville, TN for $1,715,985. In consideration, the Company cancelled the remaining notes and interest receivable of $1,675,454 due from Tennessee Chips, LLC and paid $40,531 in cash for closing costs.”
Well, I don’t like to see the word “re-acquired” used in relation to a company’s property. It always raises a red flag in my mind that asks, “What is the company doing?” Golden’s 10-K provides no explanation for this transaction, which heightens my suspicions.
Therefore, I decided to conduct a little investigative research.
According to the 2008 10-K’s list of exhibits, specifically item 10.8, the original transaction occurred in October 2000 “whereby Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real Property”.
I next looked at Golden Enterprises, Inc.’s Form 10-K for the fiscal year ended May 31, 2001, where I found this statement:
“Golden Flake on October 25, 2000 completed the sale of the Nashville Manufacturing Plant for $3.8 million. The payment of the purchase price was made $1,710,000 in cash and $2,090,000 in secured notes. The sale of the Nashville Plant concluded the Restructuring Plan which the Company implemented in Janurary of 2000. Pursuant to the Restructuring Plan, the Nashville Plant was closed in fiscal year 2000 and the sale concluded in fiscal year 2001.”
If Golden Flake sold the Nashville plant due to a restructuring plan, their 2008 Form 10-K should explain to shareholders the reason for re-acquiring the plant. Moreover, the 10-K should explicitly state whether Golden Enterprises, Inc. realized a gain or loss on the overall sale (2000) and re-acquisition (2008) transactions.
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One Golden Flake Drive Birmingham, AL 35205 Phone: (205) 458-7316 | | www.goldenflake.com |
Golden Flake Snack Foods, Inc. is a Delaware corporation with its principal place of business and home office located at One Golden Flake Drive, Birmingham, Alabama. Golden Flake manufactures and distributes a full line of salted snack items, such as potato chips, tortilla chips, corn chips, fried pork skins, baked and fried cheese curls, onion rings and puff corn. These products are all packaged in flexible bags or other suitable wrapping material. Golden Flake also sells a line of cakes and cookie items, canned dips, pretzels, peanut butter crackers, cheese crackers, dried meat products and nuts packaged by other manufacturers using the Golden Flake label. | ||
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