Market Edge Report
The financial condition of EEE needs to improve. This shows up in the large number of negative fundamental comments. Over the longer term, the company’s fundamentals will need to improve in order to sustain price appreciation. The stock is slightly overvalued at this juncture when compared to other stocks in its industry group but possibly may experience further price appreciation. EEE's ability to generate future earnings appears somewhat questionable at this juncture when compared to industry averages. The company’s long and short term debt ratios are in line with industry averages reflecting a solid financial condition. Operating margins declined last quarter and operating cash flow has been irregular. Demand for the company’s products and services has been strong as sales for the last quarter grew 5.12% rising to $12.09 million. Looking forward, the analyst consensus forecast for revenue and earnings for the next two quarters is expected to show improvement versus the prior quarter. In spite of the weak fundamentals, price momentum is very strong and the stock has outperformed the market when compared to the S&P 500. As a result of these factors, price appreciation should continue over the near term. Over the longer term, the company’s fundamentals will need to improve in order to sustain price appreciation.
All posts are only my opinion and are not buy or sell recommendations.
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