Sounds like everyone is over it, and I get it. All the bearish sentiment comes from all the investors lost money. So I'm not looking for bear replies here or arguments, because guess what we all know what they are going to say, spin and shart all over good ideas and positivity. And I might not reply for a while either myself but I will be watching as usual.
I just don't feel like duking it out with computers and/or folks who have grudges and/or positions against the company stock. I just want to take a second to point out that all is not lost here. The stock has not fared well for what to me appear as micro as well as macro reasons, internal as well as external but it's not zero, and likely not headed there.
SUNW has for all the reasons discussed previously, declared a loss in Q3 that was pretty big, on less than expected revenue. They did claim that the projects were all pushed out, and that the big stock comp for the initial owners is done, and we know this to be true via the filings.
So we're headed into Q4, which historically has been slightly lower revenue than Q3 but exceptional net margins due to rev rec rules.
So... If they were overly exceptional in Q4 this year, and somehow pulled out a ridiculous revenue number in Q4, based on whatever savings were pulled out of a hat... and whatever sales teams were bought... And they did a record revenue Q4 with record profits... Really, the sales team they bought produced revenue of 200M for their current company in 2015. If that team is blistering...white hot...in Q4, and with the pushed out projects from Q3... here's the numbers.
This isn't a "I think they will do this"... this is simply, this is what they need to get to a profitable year. It's not impossible... however very improbable:
(these are all ballpark numbers so dont grill me on the math)
They need $26 mil to reach low end guidance on revenue (95-105)
Add 10 to reach the top end of rev, $36.
Original raised guidance, was 110-115, that's $41, and $46 respectively.
They need $5.7Mil Net profit in Q4 to break even.
At their best rate of 7% net margin, they would need to hit $80 mil in revenue. Not going to happen... never.
If they pushed their net margin to 10% somehow some way... then they'd need $57 mil in revenue... again- nope (imo).
If somehow, accounting magic, revenue recognition from completed project accompanied by record sales and something else we just don't know about happens... and they managed to pull out a 14% net margin...? The magic revenue number drops back to $40 mil. The bottom end of the original guidance.
In order to make a profit for the year, with current guidance of 95-105, (26-36) the net margin would need to be 16% (36m) all the way to 25% on the low end of revenue.
So realistically, profits for the year are a bleak projection at best. However- they are not.. "impossible". I'm wondering if somehow, they pull out some amazing feat of "near break even" (razor thin loss) to avoid taxes, as well as not burn any large amount of cash... by way of revenue recognition and pushed Q3 project being completed, accompanied by the sales team absolutely crushing it... I'd like to see revenue, AT or slightly above the current range- leaving it just short of the originally raised guidance. So 36-40, with net margins anywhere from 8-12%. Take a slight loss, defer taxes for 2017 and show solid growth and operational profits.
However again- that's my pipe dream talking. Realistically, I'm looking forward to a great Q. Meaning solid positive EPS, on Solid revenue, making or beating the estimate for the Q, which is based on the meeting the annual goal of 95-105 (26-36) with slightly better than usual margins, showing again growth and operational profits while adding the the carry forward losses for 2017. Then the guidance for 2017, which I'm wondering if it will be a catalyst for the stock in the near future... will be a solidly profitable company in 2017.
If 2017, is a rerun on the growth % that 2016 was, and we eliminate all the "big" stock comp and dilution we saw in 15-16, then FY 2017 should be rock solid. Should 2018 keep rolling along? Then we'll be at that 500mil rev company Nelson boasted about.
I see a clear path- I see a great beginning here. Will we get there? I think so. Many don't, I know, and I understand why. Not looking for arguments or rebuttals- just speaking my mind.
GL
