Labor Smart Inc (LTNC)

[sobe4life]

You are wrong....

Don't confuse net profit with gross profit. LTNC has been "profitable" since inception (even posting a net profit the first quarter), but losing hundreds of thousands of dollars per quarter and the loss has been growing. People will brag about EBITDA, but it is relatively meaningless when tricks like becoming self insured shave off losses in the near term, but expose the company to costly risk in the long term.

There is nothing to be confused with. People like myself that have a good strong business background supported by an education know the processes that aggressive growth companies go through in order to obtain growth, critical mass and eventual net income.

A company that is consistently showing triple digit growth and revenue production is expected to lose money if they are paying for their growth out of gross profit margins. Increasing GPM's are indicative of a company that has a corporate infrastructure that knows how to increase profits. When a company is showing increasing GPM's then a positive EBITDA should follow suit. As in the case of LTNC. Contrary to the above statement, Labor SMART's current positive EBITDA IS NOT attributable to them being self-insured, but rather, because of their increasing GPM's. I know this because common sense tells me that there hasn't been enough time (July 2014) for the company's self-insured status to have an effect on their balance sheet. Nor, has this been reflected on any 10Q. However, rest assured, it is coming!!! As far as "costly risk"? Well, this is how Labor Ready did it and with a stock now trading at $24+ a share, I think I would follow their lead as well.