Yeah I'm not putting too much weight on MHH proformas. The company they acquired wasn't doing well, which is why they got it on the cheap. But I'm confident in MHH management. They know how to deliver on the bottom line and are good at increasing shareholder value. They were earning .20/share or so per quarter for most of 2013 and 2014. Even with losing a big customer last year (in the summer I believe). They also had some problems at the very beginning of this year, but appear to be on the road to recovery.
Q1 earnings this year were an adjusted .09/share. But they had a positive outlook on Q2. Then they posted adjusted earnings of .18/share in Q2. And were bullish on the second half. Talked on the CC about how they were rebounding from the high cost of Obamacare by factoring it into their billing now, so margins are improving. Also said in the PR they could "accelerate growth" with the acquisition. Even tho the proformas not great, MHH management said in THREE separate PRs that they expect the Hudson Global acquisition to be immediately accretive. And sure enough, altho the acquisition closed with only 2 weeks left in Q2, it added $1.3M in revenue and $70K (specified on CC) in net income. A full quarter of that alone would add another $6.5M in revenue and $350K in net income. That's .08/share! So I think things are set up beautifully for Q3.
At the very least, we've got 4 nice revenue comps coming up. I think they'll be able to improve profitability at Hudson, but we'll see. At $7, I think it's worth a shot. Worst case I think the stock does nothing on 20%+ revenue growth and flattish earnings. But if they do post Q3 earnings around .25/share, stock should recover to $10. At least. Was $16 last year when earnings weren't that strong. Will be interesting to see if the company is buying back stock here. Probably don't have a ton of cash after the acquisition. But they bought back nearly 21,000 shares in Q1 at an average price of $9.59. And had 472,000 shares remaining on their buyback program.
