Hweb, I've been a buyer of NAII today at 8.90, although that was adding more to an existing position. Thought it was cheap in the 11s, but of course that was before the news of the contract manufacturing biz in Europe and Asia and Australia slowing measurably.
I can understand some of the selling today, as there are probably better places for your money over the next 3 mos....but this is dirt cheap!
Book value: $8.97/sh, using the latest 10Q (Q2 FY17)
EV/EBITDA (TTM): 2.2x (You don't see that too often!)
Still growing their highest margin biz, which had been a concern because of patent expiration. Pretax margins have also been hurt by much higher than average spend on legal expenses:
"To protect our CarnoSyn® business and its underlying patent estate, we incurred litigation and patent compliance expenses of approximately $2.0 million during the first six months of fiscal 2017 and $779,000 during the comparable period in fiscal 2016. The increase in these legal expenses on a year over year basis is due to our efforts to enforce compliance with our patents related to instant release CarnoSyn® and to protect our tradename in the marketplace against parties who are using it without our consent."
With any luck, this expense will moderate in FY18, providing even more margin improvements.
Forecast is for growth in all segments to resume in FY18, which will begin in July 2017. Reduction in international demand is forecast by management to be "temporary". Of course, their forecast was wrong about FY17, so traders and investors will keep that in mind, which will probably keep a lid on the stock in the 11s. I'm assuming of course that it stabilizes here in the 8s and low 9s around book value. (Who knows.)
Stock buyback has been authorized for $5MM as per the Q; if management and the BOD were on the ball they should put this into effect immediately once buyback restrictions are lifted surrounding the release of the earnings report. Not that I think they will find enough shares for sale, but they could buyback around 8% of the market cap if the stock stays at 9.
So, some tough comps ahead for the next few quarters but there is a lot for the longer term value oriented investor to get excited about NAII below 9/share.
This would be a great acquisition for a competitor in the nutraceutical/supplements business....and/or could be taken private by a PE firm for 2x its current valuation. A PE firm would love that cash flow number!
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