AI
Sunday, September 30, 2007 1:24:04 AM
Digital Ally, Inc. engages in the design, development, manufacture, marketing, and sale of video surveillance products for law enforcement, homeland security, and commercial security applications. It primarily focuses on development of digital video imaging and storage products. The company's products include digital in-car video system and digital video flashlight. These products allow self-contained video and audio recording onto flash memory cards that are incorporated in the body of the flashlight. It also enables original equipment manufacturers in designing and manufacturing digital video subsystems to customer specifications. The company was founded in 2003 and is headquartered in Leawood, Kansas.
Products
Their DVM-500 digital rearview miror video camera sells for approximately $4,000. I haven't seen a purchase price for their DVF flashlight which contains a video camera. Both products are sold heavily to the law enforcement community. Pictures of these devices are shown below.
Investment Thesis
I think that DGLY represents a very good candidate for a multi-bagger. Here is a summary of my investment thesis:
1. They made $0.026/share and are growing revenue rapidly. Since GM is 69%, any additional sales drop rapidly to the bottom line.
2. They are rapidly growing manufacturing capacity. Last quarter they sold somewhere in the vicinity of 1,000 units of their products. As disclosed in the last conference call they are growing their manufacturing capacity from 400 units to 1,000 units of the rearview miror video camera per month. Additionally, they are growing their capacity to 1,000 units of the flashlight product. The expansion is expected to complete by January. So, they are increasing manufacturing capacity to 2.5 times their present capacity! If they fill their capacity I estimate that they will have an annual EPS of $1.00/share! With a PE of 20 they would have a price of $20/share.
3. They disclosed in the last conference call that they are adding new products. They are adding a product for the school bus market, they are adapting their rearview miror video camera for motorcycle police, and they are bringing the flashlight product down to the consumer level for applications such as claims adjusters. These new products will add more revenue.
4. The CEO stated a bullish outlook in the last earnings release. He stated: "While we believe Digital Ally has only scratched the surface of the market potential for its DVM systems, our sales during the second half of 2007 will also reflect a growing contribution from shipments of our Digital Video Flashlight (DVF), which is creating considerable excitement within the law enforcement industry. Our greatest challenge thus far during 2007 has been to increase production at a rate consistent with our growth in orders from new and existing customers. We significantly increased the production capacity at our Kansas City facilities during the first half of the year, and the Company is well-positioned to handle the higher level of orders anticipated during the third and fourth quarters."
5. They have stated their intention to move to a better exchange (AMEX or NASDAQ).
Revenue
DGLY has had some huge revenue growth due to the introduction of their products. Since they have exceptional gross margins of 69%, additional sales drop rapidly to the bottom line. Here is the history of their revenue:
DGLY puts out PRs for major orders that they receive. Since July 30th, they have PR'd major orders for 470 units of DVM-500. At $4,000 each this represents revenue of $1.88M. Keep in mind that this is major orders and does not include small orders which I believe are a majority of their sales.
Mississippi - 08/02/07 - 300 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988590
Mexico - 07/31/07 - 50 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988352
Arkansas - 07/30/07 - 70 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988098
Wisconsin - 07/30/07 - 50 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988098
Earnings Reports
Q2'07 http://investorshub.advfn.com/boards/read_msg.asp?message_id=22987912
Chart
Products
Their DVM-500 digital rearview miror video camera sells for approximately $4,000. I haven't seen a purchase price for their DVF flashlight which contains a video camera. Both products are sold heavily to the law enforcement community. Pictures of these devices are shown below.
Investment Thesis
I think that DGLY represents a very good candidate for a multi-bagger. Here is a summary of my investment thesis:
1. They made $0.026/share and are growing revenue rapidly. Since GM is 69%, any additional sales drop rapidly to the bottom line.
2. They are rapidly growing manufacturing capacity. Last quarter they sold somewhere in the vicinity of 1,000 units of their products. As disclosed in the last conference call they are growing their manufacturing capacity from 400 units to 1,000 units of the rearview miror video camera per month. Additionally, they are growing their capacity to 1,000 units of the flashlight product. The expansion is expected to complete by January. So, they are increasing manufacturing capacity to 2.5 times their present capacity! If they fill their capacity I estimate that they will have an annual EPS of $1.00/share! With a PE of 20 they would have a price of $20/share.
3. They disclosed in the last conference call that they are adding new products. They are adding a product for the school bus market, they are adapting their rearview miror video camera for motorcycle police, and they are bringing the flashlight product down to the consumer level for applications such as claims adjusters. These new products will add more revenue.
4. The CEO stated a bullish outlook in the last earnings release. He stated: "While we believe Digital Ally has only scratched the surface of the market potential for its DVM systems, our sales during the second half of 2007 will also reflect a growing contribution from shipments of our Digital Video Flashlight (DVF), which is creating considerable excitement within the law enforcement industry. Our greatest challenge thus far during 2007 has been to increase production at a rate consistent with our growth in orders from new and existing customers. We significantly increased the production capacity at our Kansas City facilities during the first half of the year, and the Company is well-positioned to handle the higher level of orders anticipated during the third and fourth quarters."
5. They have stated their intention to move to a better exchange (AMEX or NASDAQ).
Revenue
DGLY has had some huge revenue growth due to the introduction of their products. Since they have exceptional gross margins of 69%, additional sales drop rapidly to the bottom line. Here is the history of their revenue:
Quarter RevenueMajor Orders
Q1'06 $0.01M
Q2'06 $0.8 M
Q3'06 $1.4 M
Q4'06 $1.8 M
Q1'07 $3.4 M
Q2'07 $3.8 M
DGLY puts out PRs for major orders that they receive. Since July 30th, they have PR'd major orders for 470 units of DVM-500. At $4,000 each this represents revenue of $1.88M. Keep in mind that this is major orders and does not include small orders which I believe are a majority of their sales.
Mississippi - 08/02/07 - 300 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988590
Mexico - 07/31/07 - 50 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988352
Arkansas - 07/30/07 - 70 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988098
Wisconsin - 07/30/07 - 50 DVM-500 - http://investorshub.advfn.com/boards/read_msg.asp?message_id=22988098
Earnings Reports
Q2'07 http://investorshub.advfn.com/boards/read_msg.asp?message_id=22987912
Chart
Raw
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
