If a 30.3% gross margin and a 9.4% operating margin is sexy to you, have at it. But I don't think it's all that attractive to investors. Admittedly, the company shows improvement year over year. But it's still a low margin business that needs significant volume to get its operating margins where they should be.
I believe Sam's next major move will be to move up to a higher exchange. If he does, I think the market will like that. Then I think you could see a price in the 75 to 90 cent range. Still a lot of negatives to keep that multiple low, but it will be better than what the company has today.
Unfortunately, that 72% of sales to one company will continue to weigh heavily on the upside potential. Sam has to find a way to diversify his sales channels. That is going to take considerable time and effort.
Sam can diversify by either cultivating new channels or by acquiring companies with other sales channels. Let's just hope his next acquisition is a bit better thought out than his last one.
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